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What is consumer/producer surplus when a price ceiling is imposed on a perfectly competitive firm?

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What is consumer/producer surplus when a price ceiling is imposed on a perfectly competitive firm?

Postby tredway » Thu May 24, 2012 5:36 pm

Ok, so I've graphed this and everything and I'm pretty sure that consumer and producer surplus in a perfectly competitive firm BEFORE the price ceiling are both zero. Am I right? But then when I impose a price ceiling, I'm confused as to what happens to consumer and producer surplus. I know typically, consumer surplus increases, producer surplus decreases but that is when you have a demand that is not perfectly elastic or horizontal and is equal to the price. So, what would happen to the producer and consumer surplus?

My guess is that consumer surplus will increase but I have no clue for producer surplus. Thanks in advance!
tredway
 
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What is consumer/producer surplus when a price ceiling is imposed on a perfectly competitive firm?

Postby jarl » Thu May 24, 2012 5:39 pm

I've delivered the answer,but your question is just disappeared somewhere.I guess you have deleted it.Why?
jarl
 
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