Macmillan Learning
The Ministry of Misallocation has decreed that the production of widgets must be 2000 each month and that the production of
gizmos must be 14000 each month. Calculate the deadweight loss in each market caused by these restrictions. Note that the
scale of the quantity axis is in thousands.
Price of widgets
$10
9
87
6
5
4
321
Supply
Demand
0 1 2 3 4 5 6 7 8 9 10
Quantity of widgets (in thousands)
Price of gizmos
$100
90
80
70
60
50
40
30
20
10
0
Supply
Demand
2 4 6 8 10 12 14 16 18 20
Quantity of gizmos (in thousands)