A Price Ceiling Imposed Below Equilibrium Price Causes a Deadweight

question 64

Multiple Choice

A price ceiling imposed below equilibrium price causes a deadweight loss for society because:​

• A)​buyers benefit at the expense of sellers.
• B)​as a result of the ceiling, units of output are not produced despite the fact that the value to consumers exceeds the production cost.
• C)​sellers benefit at the expense of buyers.
• D)​the poor gain at the expense of the rich.

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Definitions:

Consideration

A legal concept referring to something of value exchanged between parties in a contract, making the agreement binding and enforceable.

Unforeseen Circumstances

Events that could not have been predicted or expected and may impact contractual agreements or obligations.

Preexisting Duty Rule

A legal principle that asserts no additional consideration is necessary to modify a contract when a party is already legally obligated to perform a duty.

Bilateral Contract

A type of agreement where both parties make a promise to each other to perform certain acts or refrain from performing certain acts.