I need help creating a thesis and an outline on The Effect of the Price on the Deadweight Loss. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Price ceiling The effect of the price ceiling on consumers, producers and the deadweight loss According to Landsburg (242), price ceiling is a maximum price that a given product or service is allowed to sell. The effect of price ceiling is determined by its level. Where the equilibrium price is below the mandated legal maximum price, the price ceiling poses no effect at all. For price ceiling to be effective, it has to be set below the equilibrium price.

The figure 1 below shows that the rent of the house is P. Qs is the number of houses property developers are willing to rent out and Qd is the number of houses consumers are willing to rent. The actual houses rented are Q s because the owners close other houses when Qs are sold. Some consumers may wish to rent houses at higher rates than P and sellers may violate the existing law by accepting these prices offered. Therefore, sellers may accept price E because the consumers will be willing to rent rates above P as competition arises among consumers who strive to acquire the scarce commodity. The prices will go high up to E which is illustrated in the diagram below. The quantity demanded exceeds Qs at any lower price than E, and consumer’s effort remains intensified. The market reaches the Equilibrium only when the price reaches P. The competitive price is D. The price the suppliers will receive is P regardless of the higher price due to price ceilings. Hence, price E is used in calculating the consumer’s surplus. Producer’s surplus is calculated using P. In both cases, the actual quantity of houses is Qs. According to Taylor and Weerapana (194), when the government imposes price ceiling, producers will sell less quantity at lower prices and will lose some profits. If some consumers purchase products at higher prices, producers will gain. However, other consumers will lose because the supplies will be scarce. According to Hirschey (437), dead weight loss results from competitive market equilibrium deviations. He further asserts that deadweight loss can occur to both consumers and producers and is not transferable. Instead, losses arise from imperfections in the market and government policies. Deadweight loss is known as welfare loss triangle. This is because when linear curves of supply and demand are used, deadweight losses are portrayed as triangles.

Figure 1- The diagram illustrating consumer and producers surpluses and losses as well as dead weight loss.

From the figure above, the effects of imposition of price ceiling on both the consumer and producer surplus is shown. The sum of consumer and producer surplus before the price ceiling was imposed is shown by the area of triangle ABC, the area BCD shows consumer surplus and the producer surplus is illustrated by the area ACD. The impact of price ceiling on consumer surplus is ambiguous. First, more consumer surplus will be obtained by consumers who are in position to purchase the commodity at lower price.

However, consumer surplus will be lost by those who had the ability to purchase the commodity initially but now cannot. This results from availability of smaller quantity of goods to be purchased. The area BFGP, illustrates consumer surplus, which portrays increase in DPGI and decrease of CFI up from the previous consumer surplus level. However, producer surplus is unambiguously reduced by CDPG amount. The outcome (lost consumer surplus plus lost producer surplus) is a deadweight loss illustrated in the area CFG.

References

Hirschey, M. Fundamentals of Managerial Economics. USA: Cengage Learning, 2009.

Landsburg, S. Price theory and applications. USA: Cengage Learning, 2008.

Taylor and Weerapana. Principles of Microeconomics. USA: Cengage Learning, 2007.

Criterion-related validity: Create a hypothetical test based around the topic of Suicide Risk and identify 3 characteristics of appropriate, relevant and measureable criteria. Identify a criterion for which predictor scores could be compared. You are to design a criterion related validity study with identifying the specific 3 characteristics and identify if they are concurrent or predictive validity evidence and explain with specific details.For example, if the test was a Career Interest Test it would be based around criterion of Likes/Dislikes, Abilities/Skills, and Experience as the criterion and then go on from there to focus on whether concurrent or predictive, scoring and explanation. (this is an example only)Create your response into a word document using APA format with a minimum of 500-750-word count. (It might be easier to insert the criterion into a table format with the explanation in paragraph format below the inserted table however, your choice as to how to create your Suicide Risk Study). Include in text citations which will connect to the factual points from your sources, and include the reference citations at the end of the document.For the Assignment, some tips:· Start with researching symptoms or “things to look for” with Suicide Risk to figure out the three (3) characteristics you would be measuring in your assessment· They want to know how you will show Criterion Related Validity with the assessment you create.  The easiest way to do that is by finding an already established suicide risk assessment that has been proven valid and comparing the scores between the two assessments. You can search for one in the Mental Measurements Yearbook (MMY) and scroll through to read the review of it.  Review of validity will sometimes have its own paragraph, but you should also get that information from the “summary” at the end of the review.  It will state whether the test has good validity and reliability.  It will also state if it doesn’t.  You want to find a test that has proven validity. The idea here is if someone who is at high risk of suicide takes the suicide risk assessment you create AND ALSO takes thealready establishedsuicide risk assessment, they should score high on both.  If someone who is not suicidal takes your assessment and the already established assessment, they should score low on both.  This will show that there is criterion related validity.  You will know that there is an issue with your validity if someone who is at high risk of suicide takes your assessment and scores low, but scores high in the established assessment.  Same thing for someone not at risk – if they score high on your assessment and low on the established assessment, again, we know somethings wrong with your assessment’s validity.