The decrease in total surplus that results from a market distortion,such as a tax,is called a
A)wedge loss.
B)revenue loss.
C)deadweight loss.
D)shrinkage of consumer surplus.

Question

Quizplus · Accepted Answer

Deadweight loss refers to the reduction in total surplus that occurs when a market is not operating at its efficient equilibrium due to external factors such as taxes, subsidies, or price floors/ceilings. It represents the lost gains from trade that occur when the quantity traded is below or above the optimum level, resulting in allocative inefficiency. Wedge loss, revenue loss, and shrinkage of consumer surplus are not commonly used terms to describe this concept.

The Decrease in Total Surplus That Results from a Market