A deadweight loss is created
A) if for the last unit produced, its marginal social cost is greater than its marginal social benefit or if its marginal social benefit is greater than its marginal social cost.
B) only if the last unit produced has a marginal social benefit equal to its marginal social cost.
C) only if the last unit produced has a marginal social benefit greater than its marginal social cost.
D) only if the last unit produced has a marginal social cost greater than its marginal social benefit.

Question

Quizplus · Accepted Answer

Deadweight loss occurs when the marginal social cost of producing a good is not equal to its marginal social benefit, either because the marginal social cost is greater than the marginal social benefit or vice versa. This indicates a misallocation of resources, leading to inefficiency in the market.

A Deadweight Loss Is Created