In 2017, it was estimated that the average amount spent on winter holiday gifts in the United States was $906. Based on the esti

Question

3 years ago

9

mate from the Waldfogel study, how much of this would be deadweight loss

1 answer:

Pie · Answer 1 · 2022-12-22T03:45:12+03:00

Deadweight loss occurs when supply and demand are not in equilibrium.

Using the Waldfogel study, the deadweight loss is between $90.6 and $302

<h3>How to estimate the deadweight loss</h3>

The average amount spent is given as:

Amount = $906

Using the Waldfogel study, the deadweight loss is between 1/10 and 1/3 of the amount spent.

So, we have:

$Minimum = \frac{1}{10} * \$906 = \$90.6$

$Maximum = \frac{1}{3} * \$906 = \$302$

Hence, the deadweight loss is between $90.6 and $302