Question

Suppose the government sets a price floor at $9 in the market. The resulting consumer surplus, producer surplus, and deadweight loss will be which of the following?




Consumer Surplus Producer Surplus Deadweight Loss
B + E C + F A + B



a



Consumer Surplus Producer Surplus Deadweight Loss
A + B C + D E + F



b



Consumer Surplus Producer Surplus Deadweight Loss
A C + D + F E



c



Consumer Surplus Producer Surplus Deadweight Loss
A + B + E C + D + F 0



d



Consumer Surplus Producer Surplus Deadweight Loss
A B + C + D E + F

Answer 1

I can’t pick the correct lettered answer without seeing the supply–demand diagram (or a clear description of where areas A–F are). Could you either upload the graph or describe which region each letter (A, B, C, D, E, F) refers to?

If it’s helpful, here’s how you can identify the correct option yourself:

- A price floor above the equilibrium reduces quantity traded from Qe to Qf (the quantity supplied at the floor price).
- Consumer surplus (CS) = area under the demand curve and above the floor price, from Q = 0 to Q = Qf. So CS is the set of labeled areas that lie between demand and the floor price up to Qf.
- Producer surplus (PS) = area above the supply curve and below the floor price, from Q = 0 to Q = Qf. So PS is the set of labeled areas that lie between supply and the floor price up to Qf.
- Deadweight loss (DWL) = the loss of total surplus from the trades that no longer occur (between Qf and Qe). Graphically, DWL is the area between the demand and supply curves for the units between Qf and Qe (typically a triangle or two triangles).

If you tell me which labeled regions are (for example) “above the price and below demand up to Qf” or “below the price and above supply up to Qf,” I’ll map that to the options and give the correct letter.