If deadweight loss exists in a competitive market, which one of the following is true?

Question

Quizplus · Accepted Answer

Deadweight loss occurs when the market is either overproducing or underproducing. If the market was producing the efficient quantity (where marginal benefit equals marginal cost), there would be no deadweight loss. Furthermore, maximizing total surplus (which occurs at the efficient quantity) also eliminates deadweight loss. Therefore, if deadweight loss exists, it is because the market is not producing the efficient quantity and is either overproducing or underproducing.

If Deadweight Loss Exists in a Competitive Market, Which One