A price floor is likely to cause deadweight loss because:
A) buyers incur additional search costs looking for the scarce good.
B) the quantity of the good is less than the equilibrium quantity.
C) a black market emerges and the good sells at prices above the price floor.
D) some buyers who want to buy at the controlled price are unable to find a seller willing to sell at that price.

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price results in a surplus, reducing the quantity traded below the equilibrium quantity, leading to deadweight loss.

A Price Floor Is Likely to Cause Deadweight Loss Because