-The figure illustrates the market for bagels. If the number of bagels is cut from 20 to 10 an hour, the deadweight loss is
A) $0.50 a bagel.
B) -$5.00 an hour.
C) $0 an hour.
D) $5.00 an hour.

Question

-The figure illustrates the market for bagels. If the number of bagels is cut from 20 to 10 an hour, the deadweight loss is
A) $0.50 a bagel. 
B) -$5.00 an hour. 
C) $0 an hour. 
D) $5.00 an hour.

Quizplus · Accepted Answer

The deadweight loss is the loss of economic efficiency when the equilibrium outcome is not achieved. If the quantity of bagels is reduced from 20 to 10, the market is not at equilibrium, leading to a deadweight loss. The deadweight loss is calculated as the area of the triangle formed between the supply and demand curves at the reduced quantity, which is $5.00 an hour in this scenario.

-The Figure Illustrates the Market for Bagels