4 terms

Deadweight Loss

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What is allocative efficiency?
P=MC.
Occurs at the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of the last unit produced by suppliers Beyond that unit the marginal cost of producing is greater than the marginal benefit received by that consumer.
What is meant by deadweight loss?
Deadweight loss is the economic INEFFICIENCY that can occur when the price is above or below the perfectly competitive market price
What happens when the price in the market is ABOVE the allocatively efficient price?
P>MC
The quantity sold will be less than the allocatively efficient quantity
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