🍷 Liquor License Market Analysis
How licensing restrictions create economic rents and deadweight loss
Market Settings
Choose license system
Market Outcomes
Price
$40
Firms
16
License Rent
$0
Consumer Surplus
$6,400
Producer Surplus
$0
DWL
$0
✅ Free entry: market at competitive equilibrium. Economic profits = $0.
💡 Key Insight
With free entry, restaurants can enter until economic profits reach zero. Price equals minimum average cost and no deadweight loss exists.
Market Graph and Data
📊 Graph Description
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| Measure | Value |
|---|---|
| License System | Free Entry (Unlimited) |
| Number of Firms | 16 |
| Equilibrium Price | $40 per meal |
| Equilibrium Quantity | 160 meals/week |
| License Rent (per firm) | $0 (no restriction) |
| Consumer Surplus | $6,400 |
| Producer Surplus | $0 |
| Total Surplus | $6,400 |
| Deadweight Loss | $0 (efficient) |
| Market Status | Efficient — no restriction binding |