Question

True or False: If the equilibrium price of concert tickets were $50, a price ceiling of $40 will cause fewer people to attend classical music concerts than if there is no price control. True False

Answer 1

Answer:

False

Explanation:

A price ceiling will always result in economic deficiencies and deadweight loss. The quantity supplied will decrease since the price set is below the equilibrium price, and the quantity demanded will increase due to the same reason. A shortage of products or services results from price ceilings.

The deadweight loss results from the loss of economic efficiency and is represented by the area below the demand curve and above the supply curve, which is left of the equilibrium price.