ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Social surplus is the sum of consumer surplus and producer surplus. Total surplus is larger at the equilibrium quantity and price than it will be at any other quantity and price. Deadweight loss is loss in total surplus that occurs when the economy produces at an inefficient quantity.

Detailed explanation-2: -deadweight loss The total loss of producer and consumer surplus from underproduction or overproduction.

Detailed explanation-3: -A tax on a good reduces the welfare of buyers and sellers of the good, and the reduction in consumer and producer surplus usually exceeds the revenues raised by the government. The fall in total surplus-the sum of consumer surplus, producer surplus, and tax revenue-is called the deadweight loss of the tax.

Detailed explanation-4: -When the total consumer and producer surplus is at a maximum, the deadweight loss in the market is zero.