Use the Following to Answer Questions

question 313

Multiple Choice

Use the following to answer questions:
Figure: Price Ceilings and Consumer Valuation
-(Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price-controlled goods compared to the allocation only to the highest-value users?

• A) $90
• B) $60
• C) $150
• D) $30

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Definitions:

Pervasive-regulation Exception

An exception to general legal principles that allows for greater regulatory intervention in business activities within industries considered to be heavily regulated.

Administrative Searches

Inspections conducted by governmental agencies without warrants for regulatory purposes, such as health and safety inspections.

Search Warrants

Legal documents that authorize law enforcement officers to conduct searches of premises and seize evidence.

Fourth Amendment

An amendment to the U.S. Constitution that protects individuals from unreasonable searches and seizures by the government, requiring any warrant to be judicially sanctioned and supported by probable cause.