Question

The pre-ceiling equilibrium price was $4, the price ceiling is $3, and the quantity consumed went from 200 thousand units to 150 thousand units. What is the total amount of revenue lost because of the price ceiling

Answer 1

Based on the quantity consumed after the price ceiling was introduced, the total amount of revenue lost was $200,000

What amount of revenue was lost?

The lost revenue can be found as:

= Loss in quantity consumed - Pre-ceiling equilibrium price

Solving gives:

= (200,000 - 150,000) x 4

= 50,000 x 4

= $200,000

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