Figure 4-5

Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments.What is the value of the deadweight loss after the imposition of the price floor?

Question

Figure 4-5
  
Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments.What is the value of the deadweight loss after the imposition of the price floor?

Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus, reducing the quantity of apartments rented. The deadweight loss is the loss in total surplus due to this inefficiency. The value of the deadweight loss is calculated based on the reduction in quantity and the difference between the price floor and equilibrium price.

Figure 4-5 Figure 4-5 Shows the Market for Apartments in Springfield. Recently