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#dead-weight-loss
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Formular of computation of dead weight losses?
Boniphas Lucas
Dec 19, 2023
Formular of computation of dead weight losses?
Formular of computation of dead weight losses?
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ChatGPT
Dec 19, 2023
The formula for calculating deadweight loss is as follows:
Deadweight Loss = 0.5 * (P2 - P1) * (Q1 - Q2)
Where:
- P1 is the initial price before the market intervention
- P2 is the new price after the market intervention
- Q1 is the initial quantity demanded before the market intervention
- Q2 is the new quantity demanded after the market intervention
This formula calculates the area of the triangle formed by the difference in price and quantity before and after the market intervention. Deadweight loss represents the loss of economic efficiency that occurs when the equilibrium quantity and price are distorted due to market interventions such as taxes, subsidies, price controls, or regulations.
Deadweight Loss = 0.5 * (P2 - P1) * (Q1 - Q2)
Where:
- P1 is the initial price before the market intervention
- P2 is the new price after the market intervention
- Q1 is the initial quantity demanded before the market intervention
- Q2 is the new quantity demanded after the market intervention
This formula calculates the area of the triangle formed by the difference in price and quantity before and after the market intervention. Deadweight loss represents the loss of economic efficiency that occurs when the equilibrium quantity and price are distorted due to market interventions such as taxes, subsidies, price controls, or regulations.
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