When production moves from the efficient quantity to a point of overproduction,
A) consumer surplus definitely increases.
B) the sum of producer surplus and consumer surplus increases.
C) there is a deadweight loss.
D) consumers definitely lose and producers definitely gain.
E) consumers definitely gain and producers definitely lose.

Question

Quizplus · Accepted Answer

When production moves from the efficient quantity to a point of overproduction, there is a deadweight loss. This occurs because the production of additional units beyond the efficient quantity results in the cost of producing the additional units being greater than the benefit received by consumers. As a result, there is a loss in economic efficiency. Consumers may or may not benefit, and producers may or may not gain, depending on the specific market conditions. However, the overall welfare of society is reduced due to the deadweight loss.

When Production Moves from the Efficient Quantity to a Point