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Price floor would lead to surplus in the market

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Reference no: EM13108489

1. When the demand line is perfectly elastic, there is no deadweight loss after taxation.

2. Firms must not operate if the market price is less than ‘break-even' price.

3. Price floor would lead to surplus in the market.

4. When the supply line is perfectly inelastic, there is no deadweight loss after subsidy.

5. A positive externality for individual X can not be a negative externality for individual Y.

Reference no: EM13108489

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