Microeconomics,, 16th Canadian Edition

c. In the second diagram, if the price of widgets is at its
market-clearing equilibrium level, , identify the areas
on the graph that sum to this market’s total economic
surplus.
d. In the second diagram, suppose the government imposes
a price floor at price Identify the areas on the graph
that represent the reduction in economic surplus as a
result of this price control.
e. For both diagrams, describe the effect on market
efficiency of the price controls. Is society as a whole
better off?
9. The diagram below shows supply and demand curves in the
Canadian market for soybeans. The free market equilibrium price
and quantity are and

a. If the price of soybeans is at its market-clearing

equilibrium level, , identify the areas on the graph that

sum to this market’s total economic surplus.

b. Suppose the government imposes an output quota at

Identify the areas on the graph that represent the

p∗

p 2.

p∗ Q∗.

p∗