With Reference to the Graph Above,if the Intended Aim of the Price

question 133

Multiple Choice

With reference to the graph above,if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers,then positive analysis would conclude:

• A) the policy was effective, since surplus gained by consumers through lower prices is greater than the surplus they lost through deadweight loss.
• B) the policy was ineffective, since surplus gained by consumers through lower prices is less than the surplus they lost through deadweight loss.
• C) the policy was effective, since surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
• D) the policy was ineffective, since the amount of deadweight loss is greater than the surplus gained by consumers from lower prices.

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Definitions:

Moderation

The action of reducing extremes or excesses; maintaining balance or avoiding any form of extremism.

Individual

Referring to a single person or thing, distinct from a group or aggregate.

Golden Mean

In Aristotelian ethics, the desirable middle between two extremes, one of excess and the other of deficiency, representing balance and moral virtue.

Practical Wisdom

The ability to make sound judgments and decisions based on experience and understanding, particularly in everyday matters.