To calculate deadweight loss:
A) integrate the area between the demand and supply curves over the range of the difference between zero and the free-market equilibrium quantity.
B) integrate the area between the demand and supply curves over the range of the difference between the quantity corresponding to the choke price and the free-market equilibrium quantity.
C) integrate the area between the demand and supply curves over the range of the difference between zero and the actual quantity.
D) integrate the area between the demand and supply curves over the range of the difference between the actual and free-market equilibrium quantities.

Question

Quizplus · Accepted Answer

Deadweight loss is calculated by integrating the area between the demand and supply curves over the range of the difference between the actual quantity (which is influenced by taxes, subsidies, or price controls) and the free-market equilibrium quantity. This area represents the loss in total surplus due to the market distortion.

To Calculate Deadweight Loss