Difference between revisions of "Deadweight loss"
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− | '''Deadweight | + | '''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]] | + | 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. |
[[Category:Economics]] | [[Category:Economics]] |
Revision as of 18:49, December 29, 2007
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.