The deadweight loss in the widgets market is $4500.
The deadweight loss in the gizmo's market is $120,000.
What does deadweight loss?
Deadweight loss is the inefficiency that occurs when the market is not in equilibrium. A market is in equilibrium when quantity demanded is equal to quantity supplied.
What is the deadweight loss in the widgets market?
Deadweight loss = 1/2 x change in price x change in quantity demanded
1/2 x (5 - 2) x (8000 - 5000)
1/2 x 3 x 3000 = $4500
What is the deadweight loss in the gizmo's market?
Deadweight loss = 1/2 x change in price x change in quantity demanded
1/2 x ($60 - $20) x (8000 - 2000)
1/2 x $40 x 6000 = $120,000
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