As illustrated in the graph, deadweight loss is the value of the trades that are not made due to the tax. The blue area does not occur because of the new tax price. Therefore, no exchanges take place in that region, and deadweight loss is created. Calculating Deadweight Loss To figure o...
On the graph, identify the areas of deadweight loss due to Eover production(DWLP),deadweight loss due to lost consumption(DWLC),the change in producer(PS),and tariff revenues(TR),and then calculate those values, plus the change ...