Deadweight loss
A) is present in all markets.
B) is the difference between consumer surplus and producer surplus.
C) exists in markets where equilibrium is distorted by price controls or taxes.
D) is always larger than consumer surplus.
E) is always smaller than producer surplus.

Question

Quizplus · Accepted Answer

Deadweight loss occurs in markets where equilibrium is distorted by price controls or taxes. It represents the inefficiency in the market due to the mismatch between the quantity supplied and the quantity demanded at the given price, resulting in lost gains from trade. It is not necessarily always larger or smaller than consumer or producer surplus, nor is it present in all markets.

Deadweight Loss