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DEADWEIGHT LOSS: A net loss in social welfare that results because the benefit generated by an action differs from the foregone opportunity cost. This is usually the combination of lost consumer surplus and lost producer surplus, and indicates of the inefficiency of a situation. Deadweight loss is commonly illustrated by a market diagram if the quantity of output produced results in a demand price that exceeds the supply price. The triangle formed by the demand curve above, supply curve below, and quantity to the left is the area of deadweight loss. If demand price equals supply price, this triangle disappears and so too does the deadweight loss. Deadweight loss can result from government actions (taxes, price controls) or from market failures (externalities, market control)
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Lesson 11: Elasticity Basics | Unit 5: Market Elasticity
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Page: 24 of 25
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Topic:
Elasticity Determinants
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- Elasticity determinants affect the coefficient of elasticity.
- Availability of Substitutes:
- The elasticities of demand and supply are relatively greater for goods that have a large number of relatively close substitutes-in-consumption or substitutes-in-production.
- Time Period:
- The elasticities of demand and supply are relatively greater for goods over a longer period than a shorter period.
- Proportion of Budget:
- The elasticity of demand is greater for goods that take up a smaller proportion of a buyer's budget.
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POSITIVE ECONOMICS The branch of economics that seeks to explain the way the economy actually operates. It is the application of the scientific method and the process of testing hypothesis to economic phenomena. A positive economic statement is one that can be refuted by looking at the real world--that is, by testing a hypothesis.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time searching for a specialty store wanting to buy either a birthday gift for your mother or a weathervane with a horse on top. Be on the lookout for pencil sharpeners with an attitude.
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This isn't me! What am I?
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In his older years, Andrew Carnegie seldom carried money because he was offended by its sight and touch.
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"The creative is the place where no one else has ever been. the You have to leave the city of your comfort and go into wilderness of your intuition. What you'll discover will be wonderful. What you'll discover will be yourself." -- Alan Alda, Actor
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AMEX
American Stock Exchange
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