This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: dD dp * dp * dG + 1 = dS dp * dp * dG dp * dG = 1 dS dpdD dp 1 dQ * S dG = dQ * S dp * dp * dG = dS dp dS dpdD dp dQ * D dG = dQ * D dp * dp * dG = dD dp dS dpdD dp And the elasticities: dp * p = 1  dG Q dQ * S Q =  dG Q dQ * D Q =  dG Q Assuming the government can sell back to the consumer, the deadweight loss of a government purchase is the remaining triangle that lies below the supply curve, above the demand curve, to the right of the original equilibrium point. We can approximate this area as follows: DWL = 1 2 ( p Sp D )( Q * SQ ) And if we wanted we could get this to be in terms of the elasticities or, more simply, use the elasticities to nd these changes, as done in problem sets. 2...
View
Full
Document
 Fall '08
 Staff
 Deadweight Loss, Monopoly

Click to edit the document details