Use the following to answer question 96:
Figure: Supply and Demand 3
-(Figure: Supply and Demand 3) Refer to the figure. If the government sets a price ceiling at $8 in this figure, it will create a deadweight loss of:
A) $6.
B) $36.
C) $9.
D) $24.

Question

Use the following to answer question 96:
Figure: Supply and Demand 3 
-(Figure: Supply and Demand 3) Refer to the figure. If the government sets a price ceiling at $8 in this figure, it will create a deadweight loss of:
A) $6. 
B) $36. 
C) $9. 
D) $24.

Quizplus · Accepted Answer

At a price ceiling of $8, the quantity demanded would exceed the quantity supplied. The deadweight loss is the area of the triangle formed by the vertical distance between the quantity demanded and the quantity supplied at the ceiling price, multiplied by the horizontal distance from the vertical axis to the quantity traded. In this case, the deadweight loss is (11-8) x (24-13)/2 = $9.

Use the Following to Answer Question 96