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A-Level Economics · Maximum price diagram question

With the cap in place, which area is PRODUCER SURPLUS?

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The diagram

The answer

The triangle H F O. Squeezed to the small triangle HFO: sellers get £3 on just 3 units, measured from the origin up S to the cap. Producers are the clear losers from a cap. Producers receive £3 on 3 units: PS shrinks to HFO — above S, below the cap, anchored at the origin O — far smaller than OCE before. That squeeze is why supply dries up under rent controls.

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This is one of 6 questions on the maximum price diagram — every corner lettered, every wrong answer diagnosed.

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