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    Deadweight Loss Formula Excel Template

    Uploaded by

    Mustafa Ricky Pramana Se
    The document provides two examples to illustrate the calculation of deadweight loss. In the first example, a price floor of $12 is imposed on movie tickets that were originally priced at $9, reducing attendance from 1,200 to 800. The deadweight loss is calculated as $600 using the formula of 1/2 * price difference * quantity difference. The second example uses demand and supply curves represented by equations to calculate deadweight loss of $1,250 when the demand curve shifts from (-0.08x + 80) to (-0.08x + 60).

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    Deadweight Loss Formula Excel Template

    Uploaded by

    Mustafa Ricky Pramana Se
    128 views7 pages
    The document provides two examples to illustrate the calculation of deadweight loss. In the first example, a price floor of $12 is imposed on movie tickets that were originally priced at $9, reducing attendance from 1,200 to 800. The deadweight loss is calculated as $600 using the formula of 1/2 * price difference * quantity difference. The second example uses demand and supply curves represented by equations to calculate deadweight loss of $1,250 when the demand curve shifts from (-0.08x + 80) to (-0.08x + 60).

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    The document provides two examples to illustrate the calculation of deadweight loss. In the first example, a price floor of $12 is imposed on movie tickets that were originally priced at $9, reducing attendance from 1,200 to 800. The deadweight loss is calculated as $600 using the formula of 1/2 * price difference * quantity difference. The second example uses demand and supply curves represented by equations to calculate deadweight loss of $1,250 when the demand curve shifts from (-0.08x + 80) to (-0.08x + 60).

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    128 views7 pages

    Deadweight Loss Formula Excel Template

    Uploaded by

    Mustafa Ricky Pramana Se
    The document provides two examples to illustrate the calculation of deadweight loss. In the first example, a price floor of $12 is imposed on movie tickets that were originally priced at $9, reducing attendance from 1,200 to 800. The deadweight loss is calculated as $600 using the formula of 1/2 * price difference * quantity difference. The second example uses demand and supply curves represented by equations to calculate deadweight loss of $1,250 when the demand curve shifts from (-0.08x + 80) to (-0.08x + 60).

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    Deadweight Loss Excel Template

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    Let us take the example of demand and price of theatre tickets to illustrate the computation of deadweight loss. In a perfec
    the theatre tickets are priced at $9 with 1,200 attending the movies. However, the government imposed a price floor of $12
    the demand declined to 800. In the perfect market scenario, 800 people would be attending the movies only if the
    price went upto $15. Calculate the movie theatre’s deadweight loss in the given scenario.

    Ticket Price People Attending Movie


    $9 1200
    $12 800
    $15 800

    Price Difference $3
    Quantity Difference 400

    Deadweight Loss is calculated using the formula given below


    Deadweight Loss = ½ * Price Difference * Quantity Difference

    Deadweight Loss $600


    of deadweight loss. In a perfect market scenario,
    ent imposed a price floor of $12 due to which
    the movies only if the
    Let us take another example wherein the original demand curve is represented by the equation (-0.08x + 80) and the
    supply curve by (0.08x), where ‘x’ is the quantity demand. However, due to some external factors, the
    demand curve shifted to (-0.08x + 60). Calculate the deadweight loss based on the given conditions.

    Original Demand
    New Demand Curve Supply Curve
    Quantity (x) Curve
    (-0.08x+60) (0.08x)
    (-0.08x+80)
    0 $80.00 $60.00 $0.00
    125 $70.00 $50.00 $10.00
    190 $64.80 $44.80 $15.20
    250 $60.00 $40.00 $20.00
    315 $54.80 $34.80 $25.20
    375 $50.00 $30.00 $30.00
    440 $44.80 $24.80 $35.20
    500 $40.00 $20.00 $40.00
    565 $34.80 $14.80 $45.20
    625 $30.00 $10.00 $50.00
    690 $24.80 $4.80 $55.20
    750 $20.00 $0.00 $60.00
    815 $14.80 $65.20
    875 $10.00 $70.00
    940 $4.80 $75.20
    1,000 $0.00 $80.00

    Price Difference is calculated as

    Price Difference $20.00

    Quantity Difference is calculated as

    Quantity Difference 125.00

    Deadweight Loss is calculated using the formula given below


    Deadweight Loss = ½ * Price Difference * Quantity Difference

    Deadweight Loss $1,250

    $90.00

    $80.00

    $70.00

    $60.00

    $50.00

    $40.00

    $30.00

    $20.00

    $10.00

    $0.00
    0 200 400 600 800 1,000 1,200
    $50.00

    $40.00

    $30.00

    $20.00

    $10.00

    $0.00
    0 200 400 600 800 1,000 1,200
    tion (-0.08x + 80) and the
    actors, the

    1,200
    1,200

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