Quotulatiousness

July 6, 2015

Price Ceilings: Deadweight Loss

Filed under: Economics — Tags: , , , — Nicholas @ 02:00

Published on 25 Feb 2015

In this video, we explore the fourth unintended consequence of price ceilings: deadweight loss. When prices are controlled, the mutually profitable gains from free trade cannot be fully realized, creating deadweight loss. With price controls, less trading occurs and both buyers and sellers miss out on the mutually profitable gains that could have occurred. We’ll show how to calculate deadweight loss using our example of a price ceiling on gasoline.

Related posts:

  1. Price Ceilings: Shortages and Quality Reduction
  2. Price Ceilings: Lines and Search Costs
  3. Tax Revenue and Deadweight Loss
  4. Price Ceilings: The US Economy Flounders in the 1970s
  5. The Equilibrium Price

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