What is meant by a deadweight loss?
A)It is the aggregate loss in total surplus in an inefficient market.
B)It is the total loss in producer surplus due to output being at an inefficient level.
C)It is the sum of the consumer and producer surpluses in an inefficient market.
D)It is the loss in consumer surplus due to a price ceiling or floor in the market.

Question

Quizplus · Accepted Answer

Deadweight loss refers to the total loss of economic efficiency in the market. It occurs when the equilibrium quantity and price are not achieved due to distortion in the market caused by intervention, such as taxes or subsidies. Deadweight loss is the aggregate loss in total surplus in an inefficient market. It is the economic cost of a market distortion or inefficiency.

What Is Meant by a Deadweight Loss