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16. What is the change in total welfare with the subsidy?

a) Gain of C and E, society is better off

b) Loss of C and E, society is worse off

c) Loss of K, society is worse off

d) Loss of M, society is worse off

17. What is the change in total welfare with the tax?

a) Gain of C and E, society is better off

b) Loss of C and E, society is worse off

c) Loss of K, society is worse off

d) Loss of M, society is worse off

For questions 18 through 20, use the same diagrams to consider the effects of the government setting a price floor at the same price that consumers would pay with a tax.

18. What is the consumer surplus before and after the price control?

a) A, B, and C before; A after

b) G, H, and I before; G after

c) G, H, J, and K before; G after

d) G and H before; G, H, J, and K after

19. What is producer surplus before and after the price control?

a) D, E, and F before; F after

b) D,E, and F before; B, D, and F after

c) J and L before; L after

d) JandLbefore;H,I,J,andLafter

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