Deadweight loss is the net loss of:

Question

Quizplus · Accepted Answer

Deadweight loss is the loss that occurs when the equilibrium quantity and price of a good or service are not achieved due to market inefficiencies such as taxes, subsidies, price floors or ceilings, etc. This leads to a reduction in both consumer surplus (which is the difference between the maximum amount a consumer is willing to pay and the actual price paid) and producer surplus (which is the difference between the minimum price a producer is willing to accept and the actual price received). Therefore, deadweight loss represents the reduction in both a and b, making option D the best choice.

Deadweight Loss Is the Net Loss Of