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Why does a tax create a deadweight loss? What determines the size of this loss?
A tax makes deadweight loss by artificially increasing price above the free market level, so decreasing the equilibrium quantity. This reduction in demand decreases consumer also producer surplus. The size of the deadweight loss depends upon the elasticities of supply and demand. Since the elasticity of demand increases and the elasticity of supply decreases, that is as supply becomes more inelastic, the deadweight loss becomes larger.
It is a long-term call option to purchase common stock at a specified price.
TRADING IN OPTIONS We have already seen that options are traded on exchanges and have already discussed how to understand published quotations. Let us now learn the trading mec
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how to get the expected growth rate?
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