Microeconomics
Microeconomics
5th Edition
ISBN: 9781319098780
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Chapter 5, Problem bWYWL
To determine

To Explain:

The reason why price and quality control lead to deadweight losses.

Concept Introduction:

Price Control:

Price control happens when the government fixes the maximum or minimum price of a product or service.

Quality Control:

Quality control refers to setting standards for about the minimum quality of products and services.

Deadweight Loss:

Deadweight loss can be stated as the loss of total surplus due to taxes or subsidies, price ceilings or floors, externalities, and monopoly pricing. It is the excess burden created due to a loss of benefit to the individuals as consumers, producers or the government.

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