In which of these situations is there no deadweight loss?
A) free market production and consumption of a private good without any externalities
B) free market production of a private good with a negative externality
C) free market consumption of a private good with a positive externality
D) consumption of a common resource without government restrictions

Question

Quizplus · Accepted Answer

In a free market production and consumption of a private good without any externalities, resources are allocated efficiently, meaning there is no deadweight loss. This is because the market equilibrium reflects the true costs and benefits to society, unlike in situations with externalities or common resources where the market fails to account for all social costs or benefits.

In Which of These Situations Is There No Deadweight Loss