Deadweight Loss

question 45

Multiple Choice

Deadweight loss:

• A) occurs when the market price is set above the equilibrium price.
• B) occurs when the market price is set below the equilibrium price.
• C) is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
• D) All of these are true.

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Definitions:

Efficient Allocation

An optimal distribution of resources in an economy where it is not possible to make someone better off without making someone else worse off.

Resources

Assets, materials, and inputs needed to produce goods and services in an economy.

Standard of Living

A measure indicating the degree of wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area.

Total Annual Output

The total value or volume of goods and services produced by an economy within a year.