Asked by
Haris Ali Khan
on Dec 05, 2024Verified
(Figure: Price Controls) Use Figure: Price Controls.A price floor has been set at point b.The area of deadweight loss that results from this price floor is:
A) egh.
B) ghi.
C) fgi.
D) efg.
Price Floor
A government or regulatory minimum price set above the equilibrium price, preventing market forces from reducing prices below that level, often applied to agricultural products.
Price Controls
Government-imposed limits on the prices charged for goods and services in a market, typically to curb inflation or protect consumers.
Deadweight Loss
A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.
- Attain understanding of price flooring principles and their effect on equilibrium in the marketplace.
- Familiarize oneself with the idea of deadweight loss attributable to price controls.
Verified Answer
JC
Learning Objectives
- Attain understanding of price flooring principles and their effect on equilibrium in the marketplace.
- Familiarize oneself with the idea of deadweight loss attributable to price controls.