(Figure: Determining Surplus and Loss) In the graph, how much is deadweight loss at a price of $12?

Question

Quizplus · Accepted Answer

The deadweight loss at a price of $12 is the triangle above the supply curve, below the demand curve, and to the right of the quantity exchanged at the equilibrium price. The height of the triangle is $10 ($22 - $12), and the base is 7 (15 - 8). Therefore, the deadweight loss is ($10 x 7)/2 = $35. Since both the consumer surplus and producer surplus are reduced by this amount, the total welfare loss is $35 + $35 = $70.

(Figure: Determining Surplus and Loss) in the Graph, How Much