FIGURE 12-1

-Refer to Figure 12-1, which represents a hypothetical market for steel. At the private market output level, what is the deadweight loss associated with the overallocation of resources equal to?
A) ABGH
B) FHAC
C) ACB
D) OHAD

Question

FIGURE 12-1
 
-Refer to Figure 12-1, which represents a hypothetical market for steel. At the private market output level, what is the deadweight loss associated with the overallocation of resources equal to?
A) ABGH 
B) FHAC 
C) ACB 
D) OHAD

Quizplus · Accepted Answer

The deadweight loss associated with the overallocation of resources in a market is represented by the area between the supply and demand curves from the socially optimal quantity to the quantity produced by the market. This area is typically triangular, and in this case, it is represented by ACB, indicating the loss in social welfare due to the market producing either more or less than the socially optimal quantity.

FIGURE 12-1 -Refer to Figure 12-1, Which Represents a Hypothetical Market for a Hypothetical