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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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Why might an oligopoly be reluctant to change its price? When some large firms have high total market share and are non-collusive, there is a strong element of interdependency.
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#question.using a well illustrated diagram, explain the concept of producers equilibrium .
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