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Explain about the deadweight loss and elasticities.
Deadweight Loss and Elasticities:
The common rule for economic policy is the other things equal; you need to select the policy which produces the smallest deadweight losses. But how we can be forecast the size of the deadweight loss related with a specified policy.
For a tax imposed while demand or supply, or both, is inelastic will origin a relatively small reduce in quantity transacted and a small deadweight loss.
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Income Elasticity of Demand is described below: Income elasticity of demand is the percentage change in the quantity demanded/required with respect to the percentage change in
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Elasticity of Demand This is a measure of how responsive the sales volume of goods is to changes in that product's price, equal to the marginal change in sales, divided by the
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