Refer to Figure 9.3.2 above. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, the resulting deadweight loss will be:

A) $1.50.
B) 200 pounds of berries.
C) $150.
D) $250.
E) $300.

Question

Darius Cephas · Accepted Answer

Final Answer : C, Explanation :  The deadweight loss is represented by the triangle with base 300 pounds and height $1.50, so the area is (1/2) x 300 x $1.50 = $225. Therefore, the deadweight loss from the price floor of $2.50 is $225 - the difference between the equilibrium price of $1.00 and the price floor. Thus, the resulting deadweight loss will be $225 - $75 = $150.

Refer to Figure 9.3.2 above. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, the resulting deadweight loss will be:

A) $1.50.
B) 200 pounds of berries.
C) $150.
D) $250.
E) $300.

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Learning Objectives

Related questions

Refer to Figure 9.3.2 above. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, the resulting deadweight loss will be:A) $1.50.B) 200 pounds of berries.C) $150.D) $250.E) $300.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 9.3.2 above. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, the resulting deadweight loss will be:

A) $1.50.
B) 200 pounds of berries.
C) $150.
D) $250.
E) $300.