A new back-pain drug would sell at a free-market equilibrium price of $600 per month, with 20,000 people using it. The government instead imposes a price ceiling of $400. At that ceiling, firms in the market produce only 15,000 units. What does this drop in quantity from 20,000 to 15,000 illustrate about the price ceiling?

1. The free-market equilibrium quantity was 20,000 units at $600. 2. Capping price at $400 keeps firms from earning as much per unit, so they choose to supply only 15,000 units at that price. 3. 20,000 minus 15,000 leaves 5,000 units of mutually beneficial trade that no longer happens. 4. Producing below the efficient equilibrium quantity is exactly what creates deadweight loss. 5. Option D is wrong because the ceiling clearly reduces quantity supplied, not just quantity demanded. _Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.5 | Demand, Supply and Efficiency_