Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R 0 .
-Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Question

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R 0 .
-Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Quizplus · Accepted Answer

Deadweight loss is the loss of economic efficiency when the equilibrium outcome is not achieved. After a price ceiling, the deadweight loss is represented by the area between the supply and demand curves that is not traded, which is C + E.

Figure 4-5 Figure 4-5 Shows the Market for Apartments