A Binding Price Floor Is Likely to Cause Deadweight Loss

question 82

Multiple Choice

A binding 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 transacted is less than the equilibrium quantity transacted.
• 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.

---

Definitions:

Valpak

A company that specializes in local and national digital and print advertising, known for distributing coupons and promotional offers through direct mail.

Coupons

Promotional tools offering discounts or special deals on products or services, usually with an expiration date to encourage prompt usage.

Games of Chance

Activities or games where the outcome is strongly influenced by random factors or luck.

Sweepstakes

A type of contest or promotional drawing where winners are selected randomly from entries to receive prizes, often used for marketing purposes.