Deadweight loss:
A) occurs in markets that are efficient.
B) occurs when markets are in equilibrium.
C) is the loss in surplus from a market not in equilibrium.
D) is additional surplus from an additional market transaction.

Question

Quizplus · Accepted Answer

Deadweight loss is the economic inefficiency that occurs when the price and quantity of a good or service do not result in the most economically efficient allocation of resources. This loss results in a reduction of total welfare (consumer and producer surplus) from what could have been achieved if the market was in equilibrium. Therefore, it occurs when markets are not in equilibrium.

Deadweight Loss