For a small tax, it is equal to negative one half times the tax times the change in quantity demanded, so if demand is perfectly elastic or supply perfectly inelastic it will be equal to zero. In a mo
For a small tax, it is equal to negative one half times the tax times the change in quantity demanded, so if demand is perfectly elastic or supply perfectly inelastic it will be equal to zero. In a monopoly situation, part of the consumer surplus is transferred to the monopolistic firm, while this part remains. Tariffs and import quotas will also create this quantity, as both consumer surplus and producer surplus are reduced, and Jared Waldfogel has famously proposed that Christmas represents one. FTP, name this distortion from fair market equilibrium which causes a non-Pareto-optimal system to have the namesake potential economic gains that are never actually transferred to anyone.
For a small tax, it is equal to negative one half times the tax times the change in quantity demanded, so if demand is perfectly elastic or supply perfectly inelastic it will be equal to zero.
deadweight loss