Asked by Ashley Elizabeth on Jul 12, 2024
Verified
If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.
Producer Surplus
The difference between what producers are willing to sell a good for and the actual price they receive, representing the benefit to producers.
Binding Price Ceiling
A government-imposed price limit on how high a price can be charged for a product or service, set below the market equilibrium, causing shortages.
- Understand the effects of governmental measures such as price floors and ceilings on the surpluses of consumers and producers.
- Acquire knowledge of the importance and procedures for determining producer surplus.
Verified Answer
BD
Brittani DeLoachJul 19, 2024
Final Answer :
False
Explanation :
A binding price ceiling, set below the equilibrium price, reduces the price producers receive for their goods, thus decreasing producer surplus.
Learning Objectives
- Understand the effects of governmental measures such as price floors and ceilings on the surpluses of consumers and producers.
- Acquire knowledge of the importance and procedures for determining producer surplus.