ps007n

# ps007n - Welfareloss Inthisexercise,...

This preview shows pages 1–4. Sign up to view the full content.

1 Welfare loss In this exercise, we would like students to familiarize  with the calculation of welfare loss and the context  under which the loss can occur.    Here is what I expect you to do: At the minimum, modified the numbers, the demand  curve and hence the calculation of welfare loss. If you have time, modify the context.  That is, create  a new example of your own, similar to supplied  example.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
2 Welfare loss The market for massages is  perfectly competitive with an  equilibrium price of \$10 per  massage. Terry’s personal demand for  massages is P = 30 – Q, where  P is the price per massage in  dollars and Q is the number of  massages per year. 20 30 Massages / yr 10 Price  (\$/massage) 30
3 Welfare loss Before marrying Susan, a masseuse, Terry purchased  his massages from her at the market price.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern