An increase in the deadweight loss (DWL)means
A) an additional reduction in welfare by one group that is not offset by a gain to another group.
B) an additional reduction in welfare by one group that is offset by a gain to another group.
C) an additional increase in welfare by one group that is not offset by a gain to another group.
D) an additional increase in welfare by one group that is offset by a gain to another group.

Question

Quizplus · Accepted Answer

Deadweight loss (DWL) is the inefficiency caused by a market not being in equilibrium. If the DWL increases, it means that there is a further reduction in welfare by one group that is not offset by a gain to another group. This situation is caused by the intervention of external factors such as taxes, subsidies, price controls or quotas, which can lead to market distortion and reduce overall welfare.

An Increase in the Deadweight Loss (DWL)means