The following figure depicts the market for a certain good.

-Refer to the figure above.If the supply were to shift 10 units to the left at any price,what would be the new deadweight loss if the price must be kept at $6?
A) $5
B) $10
C) $15
D) $20

Question

The following figure depicts the market for a certain good.
 
-Refer to the figure above.If the supply were to shift 10 units to the left at any price,what would be the new deadweight loss if the price must be kept at $6?
A) $5 
B) $10 
C) $15 
D) $20

Quizplus · Accepted Answer

Deadweight loss is the loss of economic efficiency that occurs when the equilibrium quantity of a good or service is not reached. In this case, if the supply were to shift 10 units to the left, the new equilibrium quantity would be 20 (where the new supply curve intersects the demand curve at $6). However, the optimal quantity for society is 30 units, as shown by the vertical distance between the demand curve and the supply curve at the original equilibrium point. Thus, the deadweight loss would be the area of the triangle formed by the old and new equilibrium points and the demand curve, which is equal to (0.5)*(10)*(3) = $15.

The Following Figure Depicts the Market for a Certain Good