Figure SEQ Figure 2
-Consider Figure 2.If 500 widgets are produced
A)Economic surplus is eliminated
B)Economic surplus is increased
C)A deadweight loss occurs
D)The deadweight loss is eliminated

Question

Figure SEQ Figure 2 
-Consider Figure 2.If 500 widgets are produced
A)Economic surplus is eliminated 
B)Economic surplus is increased 
C)A deadweight loss occurs 
D)The deadweight loss is eliminated

Quizplus · Accepted Answer

At a production level of 500 widgets, the marginal cost (MC) exceeds the marginal benefit (MB) which creates a deadweight loss (DWL). Therefore, choice C is correct.