Deadweight loss is
A) made up of a loss of only consumer surplus.
B) not a social loss.
C) made up of a loss of only producer surplus.
D) made up of a loss of both consumer surplus and producer surplus.

Question

Quizplus · Accepted Answer

Deadweight loss refers to the loss of economic efficiency when the equilibrium for a good or a service is not achieved or is not achievable. This can occur due to various reasons such as taxes, subsidies, price controls, or monopolies. Deadweight loss includes the loss of both consumer surplus and producer surplus because it represents the total surplus that is lost to the economy due to the inefficiency, affecting both consumers and producers.

Deadweight Loss Is