Question

When a binding price floor exists, consumer surplus will always be _____, so consumers always lose.

Answer 1

When a binding price floor exists, consumer surplus will always be reduced, so consumers always lose.

Step-by-step explanation:

When a binding price floor exists, consumer surplus will always be reduced, so consumers always lose. A price floor is a minimum price set by the government above the equilibrium price. It creates a surplus of the good because the quantity supplied exceeds the quantity demanded at that price. As a result, consumers are forced to pay a higher price and the surplus goes to producers.