The following figure depicts two industries, each facing an identical supply curve.
-Refer to the figure above. Which of the following is true?
A) Increasing equity by decreasing the price by $1 in both industries, using a price ceiling policy below the equilibrium price, requires a smaller loss in efficiency in industry A.
B) Increasing equity by decreasing the price by $1 in both industries, using a price ceiling policy below the equilibrium price, requires a smaller loss in efficiency in industry B.
C) Increasing equity by increasing the price by $1 in both industries, using a price floor policy above the equilibrium price, requires a greater loss in efficiency in industry A.
D) Increasing equity by increasing the price by $1 in both industries, using a price floor policy above the equilibrium price, requires a smaller loss in efficiency in industry B.
Correct Answer:
Verified
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