Inefficiency of Price Floors and Price Ceilings

Now, let's attempt several practical problems related to price controls. Answer the "Try It" questions here.

Try It

Consider the market for corn flour below and assume that a price ceiling of $2 is imposed. Calculate the deadweight loss:


    • The deadweight loss is $3,000
    • The deadweight loss is $1,500
    • The deadweight loss is $1,000