Figure 4-6
Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂.
-Refer to Figure 4-6.What area represents the deadweight loss at P₂?

Question

Figure 4-6
  Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂.
-Refer to Figure 4-6.What area represents the deadweight loss at P₂?

Quizplus · Accepted Answer

The deadweight loss at P₂ is represented by the area of triangle C + E, which is the loss in consumer surplus due to the reduction in quantity demanded. Areas G and H represent transfers of surplus from consumers to producers due to the price increase, but do not contribute to deadweight loss. Therefore, the best choice is C.

Figure 4-6 Figure 4-6 Shows the Market for Granola. the Granola