Question

Help I have to calculate the deadweight loss

Answer 1

Answer:

a. 15,000

Explanation:

At the equilibrium, the price is $100 and quantity demanded equal to supplied equal to 500.

At the ceiling price of $50, quantity supplied is 200.

When there is 200 products demanded, the price is at $150.

The dead weight loss is the cost created by the market inefficiency when the supply and demand is out of the equilibrium.

The dead weight loss is illustrated by the red triangle and can be calculated as following:

+) 1/2 x(500-200) x (150 - 50) = $15,000