Give detailed responses and examples to the following questions: One of the problems in a...

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Give detailed responses and examples to the following questions:   	One of the problems in a competitive market environment is deadweight losses. Respond to the following prompts on this topic and support your answers with examples and references: 	 		What are deadweight losses, and what are their causes? 		What are the market effects of a deadweight loss? 		What are the major factors that determine who will bear the burden of a tax or the incidence of a tax? 		If the government uses taxation to deal with a situation, how would the various elasticities of supply and demand affect the deadweight loss of that tax? Explain using examples. 		If the government proposes the use of cap and tax programs to deal with deadweight losses, how would they work? Explain using examples to illustrate your point. 		What are the pros and cons of such a program? Assess them. 	 	 	Adam Smith, usually referred to as the father of economics, expounded the theory of free markets and opposed any form of concentration of economic power. He believed that any authority establishing a price that provided a fair price to the providers of the factors of production would distort the market's natural ability to determine prices and output levels. In general, he believed that competitive markets would allocate resources to their highest and best use. However, in recent times, we have seen the market mechanism fail and allocate too many or too few resources to the consumption or production of some goods and services. 	 		What are some of the reasons for this failure? 		Has government intervention into competitive markets changed the efficiency of these markets? Why or why not? 		Was Smith correct or incorrect in his theories concerning the efficiency of the markets in allocation of resources? Support your answers with examples and references. 	 	  Justify your choices with valid assumptions and logically driven arguments. Cite any sources using APA format.

David · Accepted Answer

Deadweight loss is the fall in total surplus, total surplus is the sum total consumer surplus plus 
producer surplus, due to market distortion. Market distortions are the causes of deadweight 
losses. Market distortions result from government interventions. Tax is good example of 
government intervention that distorts market. Deadweight loss is also known as allocative 
inefficiency or excess burden. It is loss of economic efficiency due to market interference that 
arises due to equilibrium of goods or service is not achievable. Market interference occurs when 
government tries to interfere in the working if invisible hand of free market economy.  
Effects of deadweight losse are that inabilities attain market equilibrium.  Deadweight losses 
occur when there is interference in the working of free market economy and that result in 
inefficiency.

Give detailed responses and examples to the following questions: One of the problems in a competitive market environment is deadweight losses. Respond to the following prompts on this topic and...

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