When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing:
A)deadweight loss.
B)a situation in which marginal benefit equals marginal cost.
C)asymmetry problems.
D)an inverse externality.

Question

Quizplus · Accepted Answer

Deadweight loss is the loss of economic surplus that occurs when the quantity of a good produced and consumed is not at the socially optimal level. This can happen when there are market inefficiencies, such as when there is a shortage or surplus of a good or when externalities exist. The economic surplus in such markets is less than it would be if the market were efficient, resulting in deadweight loss.

When the Economic Surplus in a Market Is Less Than