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- The deadweight loss in the market of widgets is nil because the restricted quantity is same as the equilibrium quantity. Equilibrium is attained at a point where the demand curve is equal to the supply curve. Price is $5 and the quantity is 4000.
- In gizmos market, the equilibrium quantity is 8000 but 10000 gizmos are required to produce. so the yellow coloured portion is the deadweight loss.
- https://media.cheggcdn.com/media/b19/s1024x502/b19404d2-512f-4079-8205-e51571f986bb/php1gl9l7.png
- Area of triangle = 1/2 * base * height.
- DWL = 1/2 * (10000 - 8000) * (70-60)
- DWL = $10000.
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