Asked by Shannon Powell on May 11, 2024
Verified
At equilibrium, deadweight loss is zero.
Deadweight Loss
A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is not achievable.
Equilibrium
A state in a market where the quantity demanded equals the quantity supplied, resulting in a stable market price.
- Familiarize oneself with the concept and impacts of market equilibrium on the optimization of total surplus.
- Apprehend the notion of deadweight loss along with its causal factors.
Verified Answer
LW
Lindsey WhaleyMay 15, 2024
Final Answer :
True
Explanation :
At equilibrium, resources are allocated efficiently, meaning the quantity of goods supplied matches the quantity demanded, resulting in no deadweight loss. Deadweight loss occurs when there is a deviation from this equilibrium, typically due to market distortions like taxes, subsidies, or monopolies.
Learning Objectives
- Familiarize oneself with the concept and impacts of market equilibrium on the optimization of total surplus.
- Apprehend the notion of deadweight loss along with its causal factors.
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