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

Principles of corporate governance, Principles of corporate governance ...

Principles of corporate governance Leadership: Every corporation should be headed by a proficient BOD which should exercise leadership, venture, honesty and judgments in dire

HOW TO MANAGE FINANCES?, What are the strategies in managing your finances?...

What are the strategies in managing your finances? How it should be monitor?

Explain the strategy for product development, Product development A str...

Product development A strategy which tends to increase sales by the development of new services or products to the same market for example an entirely new or improved existing

Correlation among stock index returns, Correlation Among Stock Index Return...

Correlation Among Stock Index Returns Correlation among stock Index Returns can be defined as the extent to which the values of different types of investments move in tandem wi

How amount of financing affecting cost of capital, Q. How Amount of financi...

Q. How Amount of financing affecting cost of capital? Amount of financing as the financing require of the firm become larger , the weighted cost of capital increased several re

Floor Brokers, Floor Brokers These people have the responsibility of ex...

Floor Brokers These people have the responsibility of executing the trades forwarded by the FCMs on the floor of the exchange. They can also trade for their own account. They w

Compute the weighted average cost of capital, Q. Compute the weighted avera...

Q. Compute the weighted average cost of capital? A company's subsequent to tax specific cost of capital are as follows: Cost of debt

Return payment method, when asked to calculate return method given cash flo...

when asked to calculate return method given cash flow before depreciation how do you do it

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