A deadweight loss
A) is possible only if the good is underproduced, but is not possible if the good is overproduced.
B) is a loss inflicted on the entire society.
C) is a loss to consumers and a gain to producers.
D) subtracts only from producer surplus.

Question

Quizplus · Accepted Answer

Deadweight loss is a cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium. It represents a loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved. This can be due to various reasons such as monopolies, tariffs, taxes, subsidies, price floors, or ceilings. Deadweight loss can result from both underproduction and overproduction of a good, affecting both consumers and producers by creating a loss in total surplus.

A Deadweight Loss