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Chapter 3: 35 (page 78)

What is deadweight loss?

Short Answer

Expert verified

Deadweight loss is the defeat in the social overload that appears when a market delivers an inadequate amount.

Step by step solution

01

Concept of Deadweight loss 

Deadweight loss refers to the help failed by clients and producers when demands accomplish not work efficiently. The period deadweight means that these are benefits inaccessible to any group. Both producers and customers fail to oversupply because fewer goods are made and finished.

02

 Example of Deadweight loss 

A farmer cultivates 250kg tomatoes but only sells 200kg. The 50kg remaining tomatoes will go stale and will have to be thrown out. Deadweight loss happens when supply and need are not in equilibrium.

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Most popular questions from this chapter

Suppose both of these events took place at the same time. Combine your analyses of the impacts of the iPod and the tariff reduction to determine the likely impact on the equilibrium price and quantity of Sony Walkman-type products. Show your answer graphically.

A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at \(2.40? At \)2.00? At $3.60?

What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.

What is total surplus? How is it illustrated on a

demand and supply diagram?

Explain why the following statement is false: “In the goods market, no seller would be willing to sell for less than the equilibrium price.”
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