Question:

Does destroying supply create deadweight loss? (urgent)?

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if Short run supply curve is perfectly inelastic (for a harvested product that cant be grown till next year). If the government destroyed half the harvest to raise price, does this create a deadweight loss? (0 transportation costs)

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  1. Yes because it raises the price above marginal cost.  Any time price is above MC, except in the circumstances when a monopoly can perfectly price discriminate, there are dead weight loses.

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