Final answer:
The deadweight loss from the tax is the reduction in economic welfare as a result of fewer transactions occurring due to the tax, but the question lacks specific data to calculate the exact amount. We know that the government's tax revenue is $750 per month, indicating 150 widgets are sold after the tax. However, to find the deadweight loss, information on the changes in surplus and the specific quantity reduction is needed.
Step-by-step explanation:
The concept in question deals with the economic impact of taxes, focusing specifically on how a tax affects market equilibrium and the distribution of the tax burden between buyers and sellers. When a tax is imposed on widgets, it creates a wedge between the price consumers pay (Pc) and the price sellers receive (Pp). The deadweight loss refers to the reduction in total surplus resulting from the tax, which is the result of a decline in transactions in the taxed market.
The government raises revenue from the tax, but at the same time, the tax causes a deadweight loss by discouraging mutually beneficial trades that would have occurred without the tax. The quantity of widgets sold decreases, and the tax revenue is represented by the shaded area in the supply and demand diagram, calculated by multiplying the tax per unit by the quantity sold after the tax is applied.
To find the deadweight loss, we need to look at the change in surplus for both consumers and producers that results from the tax. Unfortunately, the question does not provide enough information to directly compute the deadweight loss, as information about the shapes or slopes of the supply and demand curves and the precise change in quantity sold due to the tax is necessary. However, we know that the government revenue is $750, which means that the quantity sold at the tax rate of $5 per widget is 150 widgets (since $750 divided by $5 equals 150).