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

question 32

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 normative analysis would conclude that:

• A) the policy was effective, since surplus gained by consumers through lower prices is less 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) there is no "right" conclusion to be reached (in a normative sense), since people have different opinions concerning what constitutes a better outcome.

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Definitions:

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