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Price ceilings are often justified as a means of helping consumers. Consider an economy where a price ceiling is introduced that causes the price to
Price ceilings are often justified as a means of helping consumers. Consider an economy where a price ceiling is introduced that causes the price to drop. How does this help consumers?
Consumer surplus increases for all consumers who were previously in the market | |
Overall producer surplus decreases. | |
Consumer surplus increases for consumers who are able to purchase the product after the price ceiling is imposed. | |
There is no transfer of surplus to government revenue or quota rents. |
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