MacmillanMThe Ministry of Misallocation has decreed that the production of widgets must be 7000 each month and that the production ofgizmos must be 4000 each month. Calculate the deadweight loss in each market caused by these restrictions. Note that the scaleof the quantity axis is in thousands.SPrice of widgets$10987654$3210SupplyDemandWhat is the deadweight loss in the widgets market?X1 2 3 4 5 6 7 8 9 10Quantity of widgets (in thousands)What is the deadweight loss in the gizmos market?Price of gizmos$1009080706050403020100SupplyDemand33159e3-e40a-4...2 4 6 8 10 12 14 16 18 20Quantity of gizmos (in thousands)L

Deadweight loss measures the inefficiency in the allocation of resources that leads to either…

Answered: Quantity of widgets (in thousands) What…

Quantity of widgets (in thousands) What is the deadweight loss in the widgets market? I $ What is the deadweight loss in the gizmos market? Quantity of gizmos (in thousands)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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Concept explainers

Price Ceilings and Price Floors

Price Ceilings and Price Floors strategy is used by the Government to control the prices of certain goods and services in the market. This method helps the Government to protect the interests of both buyers and suppliers in difficult economic times.

Question

Macmillan
M
The Ministry of Misallocation has decreed that the production of widgets must be 7000 each month and that the production of
gizmos must be 4000 each month. Calculate the deadweight loss in each market caused by these restrictions. Note that the scale
of the quantity axis is in thousands.
S
Price of widgets
$10
9
8
7
6
5
4
$
3
2
1
0
Supply
Demand
What is the deadweight loss in the widgets market?
X
1 2 3 4 5 6 7 8 9 10
Quantity of widgets (in thousands)
What is the deadweight loss in the gizmos market?
Price of gizmos
$100
90
80
70
60
50
40
30
20
10
0
Supply
Demand
33159e3-e40a-4...
2 4 6 8 10 12 14 16 18 20
Quantity of gizmos (in thousands)
L

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