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2.8.3 (HL)—Welfare loss calculation

Syllabus
First assessment 2022
Objective
2.8.3
Level
HL

2.8.3 (HL) — Welfare loss calculation

HL only

Deadweight loss is the lost net surplus from units produced or consumed away from the socially efficient quantity, often a triangle on a diagram.

Use the base of quantity difference and height of marginal-cost/benefit wedge, with correct axes and units.

Label efficient and market quantities, calculate one-half×base×height and interpret who loses.

If five excess units have a 4averagewedge,deadweightlossis4 average wedge, deadweight loss is10.

The triangle is a model estimate, not a complete measure of human harm.