In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day
What is the size of the deadweight loss? (Hint: It is equal to the triangular area of consumer and producer surplus that is lost because of the reduction in output.) A) $12.5 million
B) $6.25 million
C) $2.25 million
D) none of the above
C
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Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?
A) The Federal Aviation Administration ranks each airline based on the percentage of flights that are fully booked. These rankings affect the decisions of firms to use a particular airline to fly their employees to business meetings. B) Fixed costs in the airline industry are very large, but the marginal cost of flying one more passenger is very low. C) Airlines receive a subsidy from the government for each flight that is fully booked and departs on time. D) Cutting prices makes the airlines more popular with their customers, who may fly with the same airline in the future as the result of buying low-price tickets.
When inflation comes from the supply side, inflation and unemployment are positively correlated. Does this mean that monetary and fiscal policymakers can escape the trade-off between inflation and unemployment?
What will be an ideal response?
Allocative efficiency is achieved when
A) goods and services are fairly distributed among consumers in an economy. B) firms produce the goods and services that consumers value most. C) firms produce goods and services at the lowest cost. D) there are no shortages or surpluses in the market.
If a nation's Lorenz curve lies on the line of income equality
A. proportionately more of the nation's income is received by the lowest 20% of families than the highest 20%. B. income is unequally distributed. C. proportionately more of the nation's income is received by the highest 20% of families than the lowest 20%. D. the income received by each 20% of families is 20% of the total income.