Question

When a price floor is placed on the price of movie tickets, the consumer surplus relative to the free market equilibrium will more likely increase. decrease. remain the same. increase by 100%. decrease by 100%?

Answer 1

It will definitely decrease, as consumers will have to pay more and a deadweight loss will be present. Search up 'price floors and deadweight loss'.

Answer 2

The correct answer is letter "B": decrease.

Step-by-step explanation:

Price floors are limits placed usually by the government in order to set a minimum for the price of goods or services being traded. This action is done to make sure a minimum level of revenue for producers and that those goods are being traded at a fair price. If the price floors are removed, no matter under what other circumstances, the price levels will fall since consumers will be allowed to offer less money for the same goods.