Changes

'''Deadweight loss''' is an [[economic]] loss to the public without any offsetting gain.

'''Deadweight loss''' is an [[economic]] loss to the public without any offsetting gain.

Specifically, a [[deadweight]] loss is the loss in [[efficiency]] that a society suffers as a result of firms setting their [[monopoly]] prices greater than [[marginal cost]] (P > MC).  The deadweight loss is due to the loss in value to society of output not produced.

Specifically, a [[deadweight]] loss is the loss in [[efficiency]] that a society suffers as a result of firms setting their [[monopoly]] prices greater than [[marginal cost]] (P > MC).   

 

The loss represents the extra value that consumers obtain goods and services that is worth more to them than the price they paid.  For example, you may buy lunch for $10 but you may be so hungry that it is really worth $15 to you.  If the price of that lunch were raised by a monopoly to $16, then you wouldn't buy the lunch and your individual "deadweight loss" from that monopoly price would be $5 compared to the free market.

 

In other words, the deadweight loss is due to the loss in value to society of output not produced.

[[Category:Economics]]

[[Category:Economics]]