Figure 4-3 Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-3.What area represents the deadweight loss at the equilibrium price of P1?

Question

Figure 4-3  Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-3.What area represents the deadweight loss at the equilibrium price of P1?

Quizplus · Accepted Answer

At the equilibrium price of P1, the market is in balance, meaning supply equals demand, and there is no deadweight loss. Deadweight loss occurs when the market is not at equilibrium.

Figure 4-3 Figure 4-3 Shows the Market for Granola