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17 July, 12:31

f the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

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  1. 17 July, 14:16
    Answer: This statement is FALSE


    Price Ceiling is the maximum price fixed by government, usually less than equilibrium price to make necessity goods affordable to max people.

    Producer Surplus is the difference between prevailing price & minimum price needed to induce producers to supply. Diagramaticaly / Graphicaly, it is the vertical difference between supply curve & price level

    Implying Ceiling Imposition, the price gets reduced. Assuming unchanged Supply curve, the difference between price & supply curve reduces.

    Hence, Producer Surplus falls
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