-The above figure shows supply and demand curves for milk.If amount Q₂ is produced in the market, A)producer surplus is maximized. B)consumer surplus is minimized. C)a deadweight loss is generated. D)All of the above.

Question

Quizplus · Accepted Answer

A quantity less than the equilibrium quantity (Q₂) leads to a deadweight loss because it represents a level of production where the marginal benefit to consumers exceeds the marginal cost of production, indicating that not all mutually beneficial trades are being made. This does not necessarily maximize producer surplus or minimize consumer surplus, as those outcomes depend on the relationship between the quantity produced and the equilibrium quantity.

-The Above Figure Shows Supply and Demand Curves for Milk