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SingaporeEconomicsQuick questions
The Price Mechanism and Its Applications
Quick questions on Consumer and producer surplus explained: H2 Economics
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is deadweight loss?Show answer
A deadweight loss is the loss of total surplus when the quantity traded differs from the equilibrium quantity. If output is below equilibrium (for example because of a tax or a price floor), units whose value exceeded their cost go untraded, and the surplus on those lost trades is destroyed. It is shown as a triangle between the demand and supply curves over the missing units.
What is q1?Show answer
Define consumer surplus. [2 marks]
What is q2?Show answer
Explain why the competitive equilibrium maximises total surplus. [3 marks]
What is q3?Show answer
Explain what a deadweight loss represents. [2 marks]
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