Asked by
Gilberto Ysaccis
on Nov 17, 2024
Verified
Deadweight loss measures the decrease in total surplus that results from a tariff or quota.
Deadweight Loss
When a good or service's free market equilibrium is not met, a reduction in economic efficiency occurs.
Total Surplus
The sum of consumer surplus and producer surplus in a market, representing the total net benefit to society from the production and consumption of goods and services.
Tariff or Quota
A government-imposed restriction on the quantity of goods that can be imported (quota) or a tax levied on imported goods (tariff).
- Assess the repercussions of tariffs and quotas on domestic price levels, surplus amounts for both consumers and producers, and the total welfare state.
Verified Answer
SA
Learning Objectives
- Assess the repercussions of tariffs and quotas on domestic price levels, surplus amounts for both consumers and producers, and the total welfare state.