Define deadweight loss, Financial Management

Assignment Help:

What is meant by deadweight loss?  Why does a price ceiling usually result in a deadweight loss?

Deadweight loss considers to the benefits lost to either consumers or producers while markets do not operate proficiently.The phrase deadweight denotes that these are benefits not available to any party.  A price ceiling will be inclined to result in a deadweight loss as at any price below the market equilibrium price, quantity supplied will be below the market equilibrium quantity supplied, resultant in a loss of surplus to producers.  Consumers will purchase less as compared to the market equilibrium quantity, resultant in a loss of surplus to consumers.  Consumers will as well purchase less as compared to the quantity they demand at the price set by the ceiling.  The extra lost by consumers and producers is not captured by either group, and surplus not captured through market participants is deadweight loss.


Related Discussions:- Define deadweight loss

What do you meant by common stocks in the financial term, What do you meant...

What do you meant by common stocks in the financial term? Common Stocks: Common stocks illustrate ownership interests into the firm. Common stockholders obtain dividends (wh

Virements, what is the relevance of virements to public sector accounting

what is the relevance of virements to public sector accounting

Section C, Honey Well company is contemplating to liberalize its collectio...

Honey Well company is contemplating to liberalize its collection effort. It''s present sales are 1000000 and it''s average collection period is 30 days, it''s expected variable c

Explain the procedure for cost benefit analysis, Question 1: i) Pe...

Question 1: i) Performance budgeting is the best budgeting system. Discuss. ii) Why there is a need for implementing MTEF in the Mauritian Public Sector? Questi

Commercial paper, Commercial Paper (CP) is a short-term unsecured pro...

Commercial Paper (CP) is a short-term unsecured promissory note issued in the open market. It also represents the obligation of the issuer. Normally, it is issued

Setting budget goals and objectives, Setting Budget Goals and Objectives: ...

Setting Budget Goals and Objectives: Having collected and analysed all relevant information, and made general forecasts as to the key areas of concern / opportunity and special

Portfolio diversification, Portfolio Diversification The objectives of ...

Portfolio Diversification The objectives of diversification are to: Reduce the variability of the fund's total return; Reduce the exposure to any single component of t

Explain composite currency bond, Explain Composite Currency Bond Compos...

Explain Composite Currency Bond Composite currency bonds are denominated in a currency basket, like SDRs or ECUs, in place of a single currency.They are often known as currency

Definition of financial management, DEFINITION OF FINANCIAL MANAGEMENT ...

DEFINITION OF FINANCIAL MANAGEMENT Financial Management is a stream concerned with the generation and allotment of scarce resources (generally funds) to the most proficient use

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd