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Explain about the deadweight loss and elasticities.
Deadweight Loss and Elasticities
The general rule for economic policy is the other things equivalent; you need to choose the policy which produces the smallest deadweight loss. But how we can predict the size of the deadweight loss connected with a specified policy.
Draw an indifference curve for consumption and hours of work. (Hint: in class we discussed indifference curves for consumption and hours of leisure, this is different.)
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