Question

The loss associated with the fact that at the profitminusmaximizing quantity consumers value the goods more than it cost to produce them is called A. Lerner Loss. B. comparative loss. C. deadweight loss. D. Consumer Value Loss.

Answer 1

deadweight loss.

Step-by-step explanation:

Deadweight loss can also be referred to excess burden. Deadweight loss occurs when there is an inefficiency in the market as a result of reduction in optimal production of goods and services, in this situation the equilibrium of demand and supply is distorted.

For example, deadweight loss can result from raise in price of goods and services as a result of tax. When price is raised as a result of tax, buyers tend to reduce consumption and this can reduce the production of goods. The reduced production of goods and the reduced consumption can reduce the size of the market less than optimum equilibrium.