The following figure depicts the market for a certain good.

-Refer to the figure above.For what price would a price ceiling policy create a deadweight loss of $10?
A) $8
B) $6
C) $4
D) $3

Question

The following figure depicts the market for a certain good.
 
-Refer to the figure above.For what price would a price ceiling policy create a deadweight loss of $10?
A) $8 
B) $6 
C) $4 
D) $3

Quizplus · Accepted Answer

At a price ceiling of $4, the quantity demanded exceeds the quantity supplied, creating a shortage. This shortage results in a deadweight loss of $10, the difference between the demand and supply curves at the quantity exchanged. Any price below $4 would create a larger deadweight loss, while any price above $4 would not result in a deadweight loss.

The Following Figure Depicts the Market for a Certain Good