Question

A price ceiling that is set below the normal equilibrium price will cause:
An increase in consumer surplus, a decrease in producer surplus and dead weight loss.
An decrease in consumer surplus, a increase in producer surplus and dead weight loss.
A decrease in consumer surplus, a decrease in producer surplus and dead weight loss.
An increase in consumer surplus, a increase in producer surplus and dead weight loss.

Answer 1

Answer:

The answer is An increase in consumer surplus, a decrease in producer surplus and dead weight loss.

Explanation:

When a price ceiling is imposed we would get an inefficient outcome and the total social surplus would be reduced. The loss in social surplus that occurs when the economy produces at an inefficient quantity is called deadweight loss.  The price ceiling transfers the area of surplus from producers to consumers shown in the chart attached