Consider a Market Characterized by the Following Inverse Demand and Supply

question 133

Multiple Choice

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

• A) $0
• B) $1
• C) $2
• D) $3

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