equilibrium, beneficial transactions that would have occured can no longer take place. In the case of a price floor, the deadweight welfare loss is shown by a triangle on the left side of the equilibrium point, like in the graph. The area of the triangle is the amount of money that ...
A Price Floor Graph For a price floor to be effective, it must be set above the equilibrium price. If it’s not above equilibrium, then the market won’t sell below equilibrium and the price floor will be irrelevant. In the diagram above, the minimum price (P2) is below the equilibrium...
The surplus (equal to the quantity supplied minus the quantity demanded) at the floor price is often bought by the government. The government may also pay farmers to take some land out of cultivation. The marginal cost of production exceeds the marginal benefit and there is a deadweight loss ...
Wasted time and resources Deadweight loss, or a loss of gains from trade Misallocation of resourcesThe first two consequences are explained in the video. We’ll address the others later in the module in the discussion of efficiency.Glossary binding price ceiling when a price ceiling is set below...
Determining Surplus an Loss, In the graph, which price would allow for an effective price floor? a. $0 b. $12 c. $8 d. $5 Price Floor: A price floor is a price which is set by the government above the equilibrium to prevent the pric...
As a result, economists wonder how efficient price ceilings can be at protecting the most vulnerable consumers from high costs or even protecting them at all. A broader and more theoretical objection to price ceilings is that they create adeadweight lossto society. ...
Which of following is NOT a potential impact of an effective price ceiling, such as a rent ceiling? A. a surplus B. an increase in search C. a deadweight loss D. None of the above because they are all Which of the following...
百度试题 题目Price floor can potentially eliminate deadweight loss under monopoly 相关知识点: 试题来源: 解析 错 反馈 收藏
Price floor can potentially eliminate deadweight loss under monopoly 查看答案
In theory, both the price floor and ceiling look to be very efficient. However, if they do not get the government’s support, they may fail to give the best results in the long run. When price floor and ceiling lead to losses, we call it a deadweight loss. Such a loss occurs if ...