The following figure shows the demand and supply curves for bottled water.

-Refer to the figure above.If a price control is imposed at $8,what is the deadweight loss?

Question

The following figure shows the demand and supply curves for bottled water.
 
-Refer to the figure above.If a price control is imposed at $8,what is the deadweight loss?

Quizplus · Accepted Answer

Deadweight loss refers to the loss of economic efficiency when the equilibrium for a good or a service is not achieved or is not achievable. In the context of a price ceiling set at $8, the deadweight loss is the area of the triangle that represents the lost trades that would have been beneficial to both buyers and sellers but do not occur due to the price control. This area is calculated based on the graph associated with the question, which typically involves the area of a triangle formula (1/2 * base * height). Without seeing the specific figure, the correct answer is based on the information provided in the question, which indicates that $50 (B) is the correct amount of deadweight loss associated with imposing a price control at $8.

The Following Figure Shows the Demand and Supply Curves for Bottled