Deadweight Losses Occur When the Quantity of an Output Produced

question 75

Multiple Choice

Deadweight losses occur when the quantity of an output produced is

• A)less than, but not when it is greater than, the competitive equilibrium quantity.
• B)greater than, but not when it is less than, the competitive equilibrium quantity.
• C)less than or greater than the competitive equilibrium quantity.
• D)such that the marginal benefit of the output is just equal to the marginal cost.

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Definitions:

Marginal Cost

The change in overall cost resulting from the production of an additional unit.

Marginal Benefit

The gain in satisfaction or usefulness from consuming or producing a further unit of a good or service.

Rational Choice

A theory in economics and sociology that states individuals choose the most advantageous option considering the costs and benefits.

Best Use

The most efficient or effective utilization of a resource or asset in order to achieve the desired result or maximum value.