Dead Weight Loss statements, following, regarding, question

cyber21

Just wondering if someone could explain the rationale behind this question. I thought that a dedweight losss would affect both producer and consumer surplus regardless of whether it was caused by overproduction or underproduction. Here is the QBank Question:

Which of the following statements regarding deadweight loss is least accurate?

A) Deadweight loss from underproduction leads to a loss of producer surplus but not consumer surplus.

B) An overproduction of goods can lead to a reduction in consumer surplus.

C) Deadweight loss occurs when the quantity supplied does not maximize the sum of consumer and producer surplus.


Your answer: B was incorrect. The correct answer was A) Deadweight loss from underproduction leads to a loss of producer surplus but not consumer surplus.

Deadweight loss is the reduction in consumer and producer surplus due to underproduction or overproduction.

suyash1989

I think you are misreading the question, it's asking which is LEAST accurate which is obviously A and you are correct that it would lead to both consumer and producer surplus

kamara5

He didn't misread the question, he misunderstood option B.

Option B states that underproduction leads to reduction in consumer surplus. Its just that it did not mention producer surplus but that does not mean the statement is inaccurate. Also note that if option B states underproduction leads to reduction in consumer surplus ONLY, then it is inaccurate.