Deadweight loss:
A)creates efficiency in markets.
B)is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
C)is the loss of total surplus that results when the quantity of a good that is bought and sold is above the market equilibrium quantity.
D)always occurs in markets.

Question

Quizplus · Accepted Answer

Deadweight loss occurs when the quantity of a good that is traded is not at the equilibrium level, resulting in a loss of total surplus. This loss happens because the quantity of the good that consumers are willing to buy at the market price is not the same as the quantity of the good that producers are willing to supply at that price. Thus, deadweight loss is not beneficial for the market and leads to inefficiency. Therefore, option B is the correct answer. Options A, C, and D are incorrect because they do not accurately define deadweight loss.

Deadweight Loss