What is the economic term for the loss of economic efficiency that can occur when the free market equilibrium is not achieved?
Show answer
Deadweight loss
Usually caused by market distortions like taxes, subsidies, or price ceilings, it represents a loss to society because the 'optimal' amount of a good is not being traded.
Also asked as:
- What term refers to the societal loss that occurs when market distortions prevent the free market from reaching equilibrium?