Use the Following to Answer Questions

question 270

Multiple Choice

Use the following to answer questions:
Figure: Water Market
-(Figure: Water Market) Refer to the figure: If a price floor in the diagram gets set at $8 a gallon, what is the deadweight loss?

• A) $30,000
• B) $60,000
• C) $240,000
• D) $480,000

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Definitions:

Equilibrium Level

The state in which market supply and demand balance each other, and as a result, prices become stable.

Structural Unemployment

A situation where there is a mismatch between the skills workers have and the skills needed by employers due to technological changes or other factors.

Labor Unions

Organizations formed by workers from related fields that work for the common interest of its members in terms of wages, working hours, working conditions, and other employment matters.

Natural Rate

The unemployment rate at which the economy operates at full capacity, with only frictional and structural unemployment.