Question

What do we call the amount of consumer and producer surplus that do not occur, but that would occur if markets were efficient?

Answer 1

Deadweight loss is the amount of consumer and producer surplus that does not occur due to market inefficiency.

Step-by-step explanation:

When the market is inefficient, some consumer and producer surplus that should occur is lost. This loss is known as deadweight loss.

It represents the reduction in total surplus that occurs when the economy produces at an inefficient quantity.

Deadweight loss is like money thrown away that benefits no one, and it results from price controls or other factors that prevent suppliers and demanders from making mutually beneficial transactions.