Figure 9.4
-Refer to Figure 9.4. If the government establishes a price floor of $40 and government purchases the surplus over quantity demanded, the resulting deadweight loss will be

Question

Quizplus · Accepted Answer

A price floor above the equilibrium price leads to a surplus. The government purchasing the surplus results in a deadweight loss, calculated as the area of the triangle formed between the supply and demand curves from the equilibrium quantity to the quantity demanded at the price floor. The deadweight loss is $1,050.

Figure 9.4 -Refer to Figure 9.4. If the Government Establishes a Price