The Size of a Deadweight Loss in a Market Is

question 134

Multiple Choice

The size of a deadweight loss in a market is reduced by

• A)government legislating a price ceiling.
• B)government legislating a price floor.
• C)market price being close to marginal cost.
• D)creative destruction.

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Definitions:

Selling Price

The cost at which consumers can purchase a product or service.

Contribution Margin

The amount remaining from sales revenue after all variable expenses have been deducted, indicating how much revenue is contributing to covering fixed expenses and generating profit.

Unit Sold

The total number of individual items or products that have been sold by a business during a given period.

Variable Cost

Costs that change in direct proportion to changes in the levels of production or sales activities, such as materials and labor costs.