The Figure Below Shows the Result of a Price Fixing

question 43

Multiple Choice

The figure below shows the result of a price fixing scheme that raised price above competitive levels at point C to a price of $15 at point M. The formation of this cartel caused a deadweight loss to society of $____________ of social surplus.

• A)$5,000
• B)$15,000
• C)$20,000
• D)$31,250

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Definitions:

Common Law

A body of unwritten laws based on legal precedents established by the courts.

Social Values

Represent the important beliefs or ideals shared by members of a society concerning what is good or bad, and desirable or undesirable.

Public Policy

A governmental policy based on widely held societal values.

Legal Principles

Fundamental norms, rules, or doctrines that guide the practice of law and ensure fairness and justice in legal processes.