Asked by
Jaden Payne
on Nov 17, 2024
Verified
If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.
Consumer Surplus
The divergence between the total consumers can and are willing to pay for a product or service and what they truly pay.
Binding Price Floor
A government-imposed minimum price set above the equilibrium price, resulting in a surplus by preventing the market price from falling to its natural level.
- Learn how government interventions (price floors and ceilings) impact consumer and producer surpluses.
- Familiarize oneself with the understanding and measurement of consumer surplus.
Verified Answer
CE
Learning Objectives
- Learn how government interventions (price floors and ceilings) impact consumer and producer surpluses.
- Familiarize oneself with the understanding and measurement of consumer surplus.