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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
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    Answer: This statement is FALSE

    Explanation:

    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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