37.8k views
0 votes
Dead weight losses occur when the quantity of an output produced is

User Guymage
by
8.6k points

1 Answer

3 votes

Final answer:

Deadweight loss occurs when the quantity of an output produced is inefficient, resulting in a reduction in the total surplus of society. It is like money thrown away that benefits no one. Both consumer and producer surplus can be higher if the economy produces at the efficient quantity.

Step-by-step explanation:

A deadweight loss occurs when the quantity of an output produced is inefficient, resulting in a reduction in the total surplus of society. Deadweight loss is like money thrown away that benefits no one. It is the loss in social surplus that occurs when the economy produces at an inefficient quantity.

For example, if a price control is blocking some suppliers and demanders from making transactions they would both be willing to make, deadweight loss exists. In this case, both consumer and producer surplus can be higher if the economy produces at the efficient quantity.

User SafaOrhan
by
8.0k points

No related questions found