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In Which Situation Would Deadweight Loss Be the Greatest

Question 12

Multiple Choice

In which situation would deadweight loss be the greatest?


A) The price and quantity are at the market equilibrium.
B) Both consumer surplus and producer surplus are unchanged from their equilibrium levels.
C) The price is significantly lower than the equilibrium price, creating a transfer of producer surplus to consumers.
D) The price is slightly higher than the equilibrium, causing a small transfer of consumer surplus to producers.

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