Deadweight loss and market failure are created when a market produces
A) either more or less than the efficient quantity.
B) more than the efficient quantity but not when less than the efficient quantity is produced.
C) less than the efficient quantity but not when more than the efficient quantity is produced.
D) the efficient quantity.
E) None of the above answers is correct because deadweight loss has nothing to do with the efficient quantity.

Question

Quizplus · Accepted Answer

Deadweight loss and market failure occur when the market produces either more or less than the efficient quantity. When the market produces more than the efficient quantity, there is a surplus, which leads to deadweight loss. When the market produces less than the efficient quantity, there is a shortage, which also leads to deadweight loss. Only when the market produces the efficient quantity, there is no deadweight loss or market failure.

Deadweight Loss and Market Failure Are Created When a Market