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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.
Q. Illustrate about foreign exchange earnings? In theory foreign exchange earnings must not be hedged as the chances of an adverse movement are equivalent to those of a favoura
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What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing? Commercial paper is generally a cheaper source of short-term fin
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Margining System: Indian capital markets have finally acquired an international flavor with the market-wide rolling settlement coming into place on both the premier exchanges (
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