Deadweight loss and market failure is created when a market produces
A) either more or less than the efficient quantity.
B) more than the efficient quantity but not when less than the efficient quantity is produced.
C) less than the efficient quantity but not when more than the efficient quantity is produced.
D) the efficient quantity.
E) None of the above answers is correct because deadweight loss has nothing to do with the efficient quantity.

Question

Quizplus · Accepted Answer

Deadweight loss and market failure occur when a market produces either more or less than the efficient quantity. When the market produces more than the efficient quantity, there is a surplus that is not demanded, and resources are wasted in producing it. When the market produces less than the efficient quantity, there is a shortage that is not supplied, and consumers are not able to obtain the goods they desire. In both cases, the market is not functioning efficiently, and deadweight loss arises.

Deadweight Loss and Market Failure Is Created When a Market