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외고2018-웹용.qxp_Layout 1 2018. 6. 23. 오후 3:03 페이지 20

Ⅱ Education

Just give the moÚey as

a Christmas present

Most people may have experienced Deadweight or subsidy, or a binding price ceiling or price floor
Loss in their daily lives. Imagine that today is such as a minimum wage. For example, if there is
Christmas and you have to prepare a present for one producer with a monopoly on the product in
your best friend. So you the market, they will charge a lot of money to yield
buy something which costs the greatest profit. In this case, some people will
one hundred dollar and give up buying the product because of the high
give it to your friend. But the price. Then, the people who give up incur the
friend does not feel satis- deadweight loss. Also, the deadweight loss of tax-
fied fully and evaluates it at ation is incurred when the government charges
just seventy dollars. Dead- more money than they should charge. Society and
weight loss occurs because citizens experience social loss.
of the gap between the According to the American economist, Joel Wald-
price of the present and fogel, right after getting a Christmas present, peo-
that of the friend’s evalua- ple value it at 67 to 90 percent of the original price.
tion. Nevertheless, why do people not gift a bunch of
money?
That is because there is a sen-
timental value in a present. The
chief columnist of the Financial
Times, Tim Harford advised,
“You can make sure that the
sentimental benefits outweigh
A deadweight loss, also known the cost by giving smaller pres-
as excess burden or allocative in- ents but taking more care over
efficiency, is a loss of economic ef- them.” That is, the present can
ficiency that can occur when be both the advantage and the
equilibrium for a good or a service disadvantage.
is not achieved. In most cases, the
price of evaluation is lower than the real price of Jeong, Woojin (2-10)
the product. This phenomenon is called social ckm001204@naver.com
loss.
In terms of economics, a deadweight loss can be
caused by monopoly pricing, an externality, a tax

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