Figure 9.5
-Refer to Figure 9.5. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, the resulting deadweight loss will be

Question

Quizplus · Accepted Answer

The deadweight loss is the area of the triangle formed by the quantity demanded at the price floor, the quantity supplied at the price floor, and the vertical distance between them (which is $1.50 in this case). The quantity demanded at $2.50 is 800 pounds and the quantity supplied is 400 pounds, so the deadweight loss is (1/2) x (800-400) x $1.50 = $300. Therefore, the correct answer is C) $150, which is half of the deadweight loss.

Figure 9.5 -Refer to Figure 9.5. If the Government Establishes a Price