Figure: Consumer and Producer SurplusNo TaxWith $1 TaxPriceof apples(per basket)Priceof apples(per basket)Consumersget thisThe governmentgets thisConsumersget thisConsumersurplusConsumerNo one$4.40-gets this(deadweightloss)surplusTax revenue$1$4.00aProducer$900surplus3.40ProducersurplusDProducersget thisProducersget this1,000900 1,000Quantityof apples(baskets)Quantityof apples(baskets)According to the figures, what is the value of the deadweight loss?$100The deadweight loss cannot be calculated.$900$50

Dead Weight Loss is the excess burden or the cost to society that is caused due to inefficiency in the market. The area of dead weight loss can be calculated by using the formula of area of triangle. Area of triangle abd = 1/2 x base x height Area of triangle abd = 1/2 x (1000-900) x (4.40-3.40) Area of triangle abd = 1/2 x 100 x 1 Area of triangle abd = 50. Thus, the value of dead weight loss is $50. Answer: d. $50.

Business

Economics

Figure: Consumer and Producer Surplus No Tax With $1 Tax Price Price of apples (per basket) of apples (per basket) Consumers get this S The government gets this Consumers get this Consumer surplus Consumer No one $4.40 surplus Tax revénue $1 -gets this a (deadweight $4.00 a = $900 Producer surplus loss) 3.40 Producer surplus Producers get this Producers get this Quantity of apples (baskets) 1,000 900 1,000 Quantity of apples (baskets) According to the figures, what is the value of the deadweight loss? O $100 The deadweight loss cannot be calculated. $900 $50

Figure: Consumer and Producer Surplus No Tax With $1 Tax Price Price of apples (per basket) of apples (per basket) Consumers get this S The government gets this Consumers get this Consumer surplus Consumer No one $4.40 surplus Tax revénue $1 -gets this a (deadweight $4.00 a = $900 Producer surplus loss) 3.40 Producer surplus Producers get this Producers get this Quantity of apples (baskets) 1,000 900 1,000 Quantity of apples (baskets) According to the figures, what is the value of the deadweight loss? O $100 The deadweight loss cannot be calculated. $900 $50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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