A deadweight loss: a)can be large in a perfectly competitive market. b)is a reduction in aggregate...

A deadweight loss:

a)can be large in a perfectly competitive market.

b)is a reduction in aggregate surplus below its maximum possible value.

c)is independent the amount produced and consumed.

d)is equal to the difference between total willingness to pay and the total avoidable cost of production.

Solutions

Expert Solution

Correct : b)is a reduction in aggregate surplus below its maximum possible value.

Deadweight loss results when less than efficient output is produced. This is a decrease in aggregate surplus. Some of producer surplus and consumer surplus get lost.

Rahul Sunny answered 2 years ago

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