Deadweight loss __________________________.

Question

Is ensured when a competitive market is in equilibrium

Is the reduction in consumer surplus and producer surplus that results from an inefficient market outcome

Occurs when marginal benefits equal marginal costs

Markets allocate resources efficiently

Answer 1

Deadweight loss is the reduction in consumer surplus and producer surplus that results from an inefficient market outcome. It occurs when the equilibrium in a market is not reached or maintained, often due to externalities, taxes, price controls, or monopolistic practices, leading to a loss of economic efficiency.