Define the deadweight loss .

Question

Want to see more full solutions like this?

Answer 1

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Explain how the introduction of egg replacers and plant-based egg products will impact the bakery industry. Provide a graphical representation.

Explain Professor Frederick's "cognitive reflection" test.

11:44 Fri Apr 4 Would+You+Take+the+Bird+in+the+Hand Would You Take the Bird in the Hand, or a 75% Chance at the Two in the Bush? BY VIRGINIA POSTREL WOULD you rather have $1,000 for sure or a 90 percent chance of $5,000? A guaranteed $1,000 or a 75 percent chance of $4,000? In economic theory, questions like these have no right or wrong answers. Even if a gamble is mathematically more valuable a 75 percent chance of $4,000 has an expected value of $3,000, for instance someone may still prefer a sure thing. People have different tastes for risk, just as they have different tastes for ice cream or paint colors. The same is true for waiting: Would you rather have $400 now or $100 every year for 10 years? How about $3,400 this month or $3,800 next month? Different people will answer differently. Economists generally accept those differences without further explanation, while decision researchers tend to focus on average behavior. In decision research, individual differences "are regarded…

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Answer 6

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Answer 7

Chapter 9, Problem 1RQ

To determine

Define the deadweight loss.

Answer 8

Expert Solution & Answer

Explanation of Solution

The deadweight loss is defined as the loss of the total consumer surplus and producer surplus due to overproduction or underproduction. The deadweight loss occurs when the market is not in its competitive equilibrium. In other words, being in competitive equilibrium, there will be a reduction in the economic surplus due to price distortion and this reduction is termed as the dead weight loss. The price ceiling results in deadweight loss in the market. The reason is setting the price below the market price that reduces the quantity supplied by the producer. This reduction leads to fall in the surplus of producer and consumer but it benefits the consumer. Thus, the price celling results in deadweight loss in the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Deadweight loss: It is the loss of the economic surplus, because of the market economy not being in the competitive equilibrium.

Price ceiling: It is the government imposed maximum price that can be charged for a good or service in the market. This is imposed in order to prevent the prices from going exceedingly high.

Answer 12

Ch. 9 - Prob. 1RQ Ch. 9 - Suppose the supply curve for a good is completely...Ch. 9 - Prob. 3RQ Ch. 9 - Prob. 4RQ Ch. 9 - Prob. 5RQ Ch. 9 - Prob. 6RQ Ch. 9 - Prob. 7RQ Ch. 9 - Prob. 8RQ Ch. 9 - Why does a tax create a deadweight loss? What...Ch. 9 - Prob. 1E

Define the deadweight loss .

Define the deadweight loss.

Explanation of Solution

Want to see more full solutions like this?

Chapter 9 Solutions