Asked by Aiysha Edwards on May 02, 2024
Verified
Deadweight loss is the difference between consumer surplus and producer surplus.
Deadweight Loss
A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.
Consumer Surplus
The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually do pay.
- Comprehend the principle of deadweight loss and its underlying reasons.
Verified Answer
HK
Hunter KariusMay 07, 2024
Final Answer :
False
Explanation :
Deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. It typically occurs due to market inefficiencies or interventions, such as taxes or subsidies, and represents the total surplus lost by both consumers and producers.
Learning Objectives
- Comprehend the principle of deadweight loss and its underlying reasons.