ps007n - Welfareloss Inthisexercise,...

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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. 
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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
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3 Welfare loss Before marrying Susan, a masseuse, Terry purchased  his massages from her at the market price.  
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