Refer to the diagram. If actual production and consumption occur at Q2,
A) eﬃciency is achieved.
B) an eﬃciency loss (or deadweight loss) of a + b + c + d occurs.
C) an eﬃciency loss (or deadweight loss) of a + c occurs.
D) an eﬃciency loss (or deadweight loss) of e + f occurs.

Question

Refer to the diagram. If actual production and consumption occur at Q2,
A) eﬃciency is achieved. 
B) an eﬃciency loss (or deadweight loss) of a + b + c + d occurs. 
C) an eﬃciency loss (or deadweight loss) of a + c occurs. 
D) an eﬃciency loss (or deadweight loss) of e + f occurs.

Quizplus · Accepted Answer

At Q2, the marginal cost of producing the last unit (MC) equals the marginal benefit to society of consuming it (MB). This results in an efficient allocation of resources, meaning that there is no deadweight loss. Therefore, option A is correct.

Refer to the Diagram