-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,deadweight loss occurs because
A) consumers place a greater value on the last apartment unit than the cost to supply it.
B) the supplier of the last apartment unit receives a rental price that is less than the marginal cost of supplying it.
C) the quantity of apartments supplied has decreased.
D) All of the above.

Question

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,deadweight loss occurs because
A) consumers place a greater value on the last apartment unit than the cost to supply it. 
B) the supplier of the last apartment unit receives a rental price that is less than the marginal cost of supplying it. 
C) the quantity of apartments supplied has decreased. 
D) All of the above.

Quizplus · Accepted Answer

A price ceiling below the equilibrium price causes a shortage, meaning consumers value the last unit more than its cost, leading to deadweight loss.

-The Above Figure Shows Supply and Demand Curves for Apartment