Question

refer to figure 9 - 11. what is the amount of deadweight loss from overproduction of carnations? $100 $0 $200 $50

Explanation:

Step1: Determine the formula for dead - weight loss from overproduction

The dead - weight loss (DWL) from overproduction in a supply - demand context (due to a tariff in this case, which causes overproduction) is given by the formula for the area of a triangle: \(DWL=\frac{1}{2}\times\text{base}\times\text{height}\).

Step2: Identify the base and height from the graph

The height of the triangle is the difference between the price with the tariff (\(P = 6\)) and the world price (\(P = 4\)), so \(h=6 - 4=2\). The base of the triangle is the difference between the quantity supplied at the tariff - inclusive price (\(Q_s = 200\)) and the quantity supplied at the world price (\(Q_s'=100\)), so \(b = 200 - 100=100\)

Step3: Calculate the dead - weight loss

Substitute the values of base and height into the area formula: \(DWL=\frac{1}{2}\times(6 - 4)\times(200 - 100)\)

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Answer:

\(\$100\)