Consider the following figure depicting the Demand and Supply in a market.P500-400-300-200-100-O22.5What is the value of Consumer Surplus if the government imposes a price floor of $300 on thismarket?200N₂45015SD

Consumer surplus is the cost they actually pay against the cost they are willing to pay. Usually,…

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Economics

What is the value of Consumer Surplus if the government imposes a price floor of $300 on this market? 0 2 2.5 O200 450

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 4WNG

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Concept explainers

Market Surplus and Shortage Analysis

In everyday language, a “surplus” indicates that there is an excess of something, while a “shortage” means that there is a scarcity of it. In economics, “market surplus” refers to the condition where the quantity of a certain good more available than what is required or “demanded” by the market. In the same way, a “market shortage” refers to the condition where the quantity of a certain good is less available than what is “demanded” by the market. If quantity in demand is written as Qd and quantity that is supplied is written as Qs, then, the condition Qs > Qd indicates market surplus and condition Qd > Qs indicates market shortage.

Question

Consider the following figure depicting the Demand and Supply in a market.
P
500-
400-
300-
200-
100-
O
2
2.5
What is the value of Consumer Surplus if the government imposes a price floor of $300 on this
market?
200
N₂
450
15
S
D

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