The Ministry of Misallocation has decreed that the production of widgets must be 5000 each month and the production of gizmos must be 8000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. Price of widgets Price of gizmos $10 s100, 9 90 Supply Supply 8 80 7 70 6 60 50 4 40 Demand 3 30 Demand 2 20 1 10 0 1 2 3 4 5 6 7 8 9 10 0 2 4 6 8 10 12 14 16 18 20 Quantity of widgets (in thousands) Quantity of gizmos (in thousands) What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market? %24

The Ministry of Misallocation has decreed that the production of widgets must be 5000 each month and the production of gizmos must be 8000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. Price of widgets Price of gizmos $10 s100, 9 90 Supply Supply 8 80 7 70 6 60 50 4 40 Demand 3 30 Demand 2 20 1 10 0 1 2 3 4 5 6 7 8 9 10 0 2 4 6 8 10 12 14 16 18 20 Quantity of widgets (in thousands) Quantity of gizmos (in thousands) What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market? %24

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

PLease explain resondes and please help me solve, where should th problem begin .

The Ministry of Misallocation has decreed that the production of widgets must be 5000 each month and the production of
gizmos must be 8000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note
the scale of the quantity axis is in thousands.
Price of widgets
Price of gizmos
S100
s10
9.
90
Supply
Supply
8
80
7
70
6
60
5
50
4
40
3
30
Demand
Demand
2
20
1
10
0 1 2 3 4 5 6 7 8 9 10
o 2 4 6 8 10 12 14 16 18 20
Quantity of widgets (in thousands)
Quantity of gizmos (in thousands)
What is the deadweight loss in the widgets market?
What is the deadweight loss in the gizmos market?
%24

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