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Exhibit 7-7 -Exhibit 7-7 Shows the Effects of a Decrease in the Decrease

Question 111

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Exhibit 7-7 Exhibit 7-7 -Exhibit 7-7 shows the effects of a decrease in the oil supply due to a war in the Middle East. If the government reacts to the shift of the supply curve from S<sub>1</sub> to S<sub>2</sub><sub> </sub>by imposing a price ceiling at P<sub>3</sub>, then the consumer surplus A) increases by area C less area H. B) decreases by area C less area H. C) increases by area G less area I. D) decreases by area G less area I. E) remains constant.
-Exhibit 7-7 shows the effects of a decrease in the oil supply due to a war in the Middle East. If the government reacts to the shift of the supply curve from S1 to S2 by imposing a price ceiling at P3, then the consumer surplus


A) increases by area C less area H.
B) decreases by area C less area H.
C) increases by area G less area I.
D) decreases by area G less area I.
E) remains constant.

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