Question

describes the loss in social surplus that occurs when the economy produces at an inefficient quantity. a- producer surplus b-dead weight loss c- Consumer surplus

Answer 1

This is known as the dead weight loss. Dead weight loss is strictly an efficiency loss that results from reduced production and increased price. Sometimes it is the result of excessive production and too low a price as in the case of externalities. Otherwise in case of taxes, there is generally a reduction in the quantity and an increase in the price so that consumer surplus is reduced. Producer surplus is also reduced when taxes distort the market outcome and lead to the generation of deadweight loss.