Question

1)How can a price floor reduce the total surplus? Show it graphically.

2. This is Philippine's real GDP (in thousands of pesos) for 2008 to 2011. Find nominal GDPs for each year:

Year	GDP at Constant Price	Deflator	Nominal GDP
2008	319,728	169.2413
2009	374,841	168.8164
2010	386,930	193.0217
2011	420,485	213.126

3. You are provided below Philipines GDP (in thousands of pesos) for 2015 to 2018.

a. Calculate real GDP and GDP growth:

Year	GDP at Current Price	Deflator	Real GDP	GDP Growth
2015	1,260,009	250.6691
2016	1,373,027	263.7922
2017	1,434,553	262.3692
2018	1,478,707	269.5759

Answer 1

Price floor is the policy where maximum price is fixed by the government that can be charged and generally higher than the equilibrium price.

Due to the price floor, Supply of the goods increases and demand for the goods decreases . Due to which excess supply is created in the market.

As , price increases , it decreases the consumer surplus and increases the producer surplus. (As, shown in the diagram.)

And due to excess supply , there will be loss of trade (Deadweighloss) shown in red colour in the diagram.