An efficiency loss (or deadweight loss):
A) is measured as the combined loss of consumer surplus and producer surplus.
B) results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price.
C) can result from underproduction,but not from overproduction.
D) can result from overproduction,but not from underproduction.

Question

Quizplus · Accepted Answer

An efficiency loss, or deadweight loss, occurs when the market is not operating at its most efficient point, typically due to market distortions such as taxes, subsidies, price controls, or monopolies. This inefficiency is measured as the combined loss of consumer surplus and producer surplus, which are the benefits consumers and producers receive from participating in the market. When the market is not at equilibrium, where supply equals demand, these surpluses are not maximized, leading to a deadweight loss.

An Efficiency Loss (Or Deadweight Loss)