Without a belief that the market has failed, which of the following will result in deadweight loss?
A)A price below equilibrium.
B)A price at equilibrium.
C)A price above equilibrium.
D)A price below or above equilibrium.

Question

Quizplus · Accepted Answer

A price set below or above the equilibrium leads to a deadweight loss because it prevents the market from allocating resources efficiently. At equilibrium, supply equals demand, and there is no deadweight loss. Prices set artificially higher or lower disrupt this balance, leading to either excess supply or demand, respectively.

Without a Belief That the Market Has Failed, Which of the Following