(Figure: Market 5) The graph shows the market for teddy bears.
When the market produces and sells nine teddy bears, the deadweight loss is represented by the:

A)rectangle between prices $6.50 and $2 and quantities of zero to 5.
B)rectangle between prices of $6.50 and $2 and quantities of 5 and 9.
C)area between the demand and supply curves to the left of a quantity of 5.
D)area between the demand and supply curves between quantities of 5 and 9.

Question

(Figure: Market 5) The graph shows the market for teddy bears.
When the market produces and sells nine teddy bears, the deadweight loss is represented by the:

A)rectangle between prices $6.50 and $2 and quantities of zero to 5. 
B)rectangle between prices of $6.50 and $2 and quantities of 5 and 9. 
C)area between the demand and supply curves to the left of a quantity of 5. 
D)area between the demand and supply curves between quantities of 5 and 9.

Quizplus · Accepted Answer

The deadweight loss is the loss of consumer and producer surplus that occurs when the market produces and sells less than the efficient quantity. In this case, the efficient quantity is where demand and supply intersect, which is at a quantity of 5. When 9 teddy bears are produced and sold, there is a surplus of supply, leading to a deadweight loss. The area between the demand and supply curves between quantities of 5 and 9 represents this deadweight loss.

(Figure: Market 5) the Graph Shows the Market for Teddy