Ceteris paribus, explain why it is that when a lower ceiling price is imposed below equilibrium price, a greater deadweight loss results
When a lower price ceiling is imposed below equilibrium price, there is a greater disincentive for sellers to produce output. The quantity of output supplied to the market is reduced, and a greater deadweight loss results. Despite the fact that these units of output are valued by consumers in excess of their production cost, sellers have no private incentive to produce them.
You might also like to view...
The United States Postal Service (USPS) is the only organization allowed to deliver first-class mail in the United States. The market structure that best fits the USPS is probably
A) perfect competition. B) monopolistic competition. C) monopoly. D) oligopoly.
Government-imposed quantity restrictions
A) generate a higher price for the good than would prevail under freely competitive markets. B) generate a lower price for the good than would prevail under freely competitive markets. C) does not affect the price of the good because quantity restrictions always ban sale of the good completely. D) can cause prices to either be higher or lower, but always cause excess quantities supplied to develop.
If the marginal propensity to save in a country is 0.4, then the value of the tax multiplier is: a. ?1
b. ?0.5. c. ?2. d. ?1.5.
Suppose you are given the following demand data for a product.PriceQuantity Demanded$1030940850760670Using the regular percentage change formula, what is the price elasticity of demand when price decreases from $9 to $7?
A. Elastic B. Unit elastic C. Inelastic D. Perfectly elastic