The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Refer to this figure to answer the following questions:

-For a perfectly competitive market,which of the following areas would be designated as deadweight loss?
A) A
B) B
C) C
D) A + B
E) There is no deadweight loss.

Question

The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Refer to this figure to answer the following questions:
 
-For a perfectly competitive market,which of the following areas would be designated as deadweight loss?
A) A 
B) B 
C) C 
D) A + B 
E) There is no deadweight loss.

Quizplus · Accepted Answer

In a perfectly competitive market, there is no deadweight loss because the market achieves allocative efficiency, where the quantity supplied equals the quantity demanded at the equilibrium price.

The Following Figure Depicts a Generalized Downward-Sloping Market Demand (D)curve