The decrease in social surplus from a market distortion is referred to as ________.
A) deadweight loss
B) market loss
C) revenue loss
D) Pareto loss

Question

Quizplus · Accepted Answer

Deadweight loss refers to the decrease in social surplus that occurs when a market is not operating at its equilibrium. This can be caused by various market distortions, such as price floors or ceilings, taxes, or subsidies. It is the loss that results from inefficient production or consumption, which represents lost potential gains in overall welfare.

The Decrease in Social Surplus from a Market Distortion Is