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

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 4E

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