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Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4, the resulting increase in producer surplus would be larger than any possible loss of consumer surplus any possible increase in consumer surplus would be larger than the loss of producer surplus the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus

Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4, the resulting increase in producer surplus would be larger than any possible loss of consumer surplus any possible increase in consumer surplus would be larger than the loss of producer surplus the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
Problem 6PA
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It says the option four is correct. Can you explain how? If you can graph it so that I can see it that would be awesome. To me, it seems like the gain in consumer surplus would be larger than the loss of producer surplus. But the correct option, option D says that’s not right.
in this market. s equilibrium allocation of resources efficient? That is, does it maxi plus? To answer this question, recall that when a market is in equilib- e determines which buyers and sellers participate in the market. T who value the good more than the price (represented by the seg Price A Supply Consumer surplus quilibrium price E Producer surplus Demand В Equilibrium quantity Quantity
Transcribed Image Text:in this market. s equilibrium allocation of resources efficient? That is, does it maxi plus? To answer this question, recall that when a market is in equilib- e determines which buyers and sellers participate in the market. T who value the good more than the price (represented by the seg Price A Supply Consumer surplus quilibrium price E Producer surplus Demand В Equilibrium quantity Quantity
Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4, the resulting increase in producer surplus would be larger than any possible loss of consumer surplus any possible increase in consumer surplus would be larger than the loss of producer surplus the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus. You selected this answer.
Transcribed Image Text:Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4, the resulting increase in producer surplus would be larger than any possible loss of consumer surplus any possible increase in consumer surplus would be larger than the loss of producer surplus the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus any possible increase in consumer surplus would be smaller than the loss of producer surplus. You selected this answer.
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