450 400 350 Q, a 9) The above figure shows supply and demand curves for apples.

Question

450 400 350 Q, a 9) The above figure shows supply and demand curves for apples. If the government creates a price farget of we discussed price targetin class): $450, the deadweight loss is (note: B) j A) f+g C) ftgtitjtk 10) The above figure shows supply and demand curves for apples. If the government creates a price support of $450, the deadweight loss is (note: we discussed price support in class): A) j B) f+g 11) The above figure shows supply and demand curves for apples. If the government creates a price ceiling of $450, the deadweight loss is: A) zero B) j C) f+gtitj+k D) f gthtitjtk

Explanation / Answer

Answer

9) The deadweight loss will be j. So option (b) is correct. Total surplus after price target will be a+b+c+d+f+g-j. So j amount is lost.

10) Price support will cause the deadweight loss in this case as the equilibrium price is less than that. The deadweight loss will be f+g in this case. So option (b) is correct.

CS- a+b+f

PS- c+d+g

Consumer surplus- a

Producer surplus - b+c+d

11) Price ceiling will have no effect as the equilibrium price is lower than that. The dead weight loss will be zero. so option (a) is correct.

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