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.