-Refer to the diagram above.Assume that a price ceiling is imposed at point G,i.e. ,the price is now represented by the distance 0G.The value of the deadweight loss is
A) ½(E
H)(H
C).
B) ½(F
H)(H
C).
C) ½(E
H)(H
C)+ ½(F
H)(H
C).
D) ½(E
H)(H
C)+ ½(F
H)(H
C)+ GJEF.
E) unable to be calculated.

Question

-Refer to the diagram above.Assume that a price ceiling is imposed at point G,i.e. ,the price is now represented by the distance 0G.The value of the deadweight loss is
A) ½(E
H)(H
C). 
B) ½(F
H)(H
C). 
C) ½(E
H)(H
C)+ ½(F
H)(H
C). 
D) ½(E
H)(H
C)+ ½(F
H)(H
C)+ GJEF. 
E) unable to be calculated.

Quizplus · Accepted Answer

The deadweight loss is the sum of the two triangles formed by the price ceiling: ½(EH)(HC) and ½(FH)(HC).

-Refer to the Diagram Above