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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

If the price is above the equilibrium level, would you predict a surplus or a shortage? If the price is below the equilibrium level, would you predict a surplus or a shortage? Why?

Explain why the following statement is false: “In the goods market, no buyer would be willing to pay more than the equilibrium price.”

Name some factors that can cause a shift in the

supply curve in markets for goods and services.

What is the relationship between total surplus and economic efficiency?

Does a price ceiling attempt to make a price higher

or lower?
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