The deadweight loss is $40.
given P0 = $5, PS,0 = $8, PS,1 = $11, P = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q = 120.
In economics, deadweight loss refers to the loss of economic efficiency that occurs when the equilibrium quantity and price of a good or service deviate from the optimum. To calculate deadweight loss, we need to compare the total utility at the equilibrium quantity and price to the total utility at the optimal quantity and price.
In this case, the equilibrium quantity and price are Q = 120 and P = $14, while the optimal quantity and price are Q = 80 and P = $16. By finding the area of the triangle formed between the demand and supply curves from the equilibrium quantity to the optimal quantity, we can calculate the deadweight loss.
Using the formula for the area of a triangle A = 1/2 x base x height, we can calculate the deadweight loss as follows:
A = 1/2 x (Qe - Qt) x (Pe - Pt)
A = 1/2 x (120 - 80) x ($14 - $16) = 1/2 x 40 x -$2 = -$40
So, the deadweight loss in this scenario is $40.