In the context of economic surplus and efficiency, if the estimated economic loss from all motor vehicle crashes in 2012 was \$26,000, this amount most likely represents:

• A. The consumer surplus generated by motor vehicle crashes in 2012.
• B. The producer surplus lost due to motor vehicle crashes in 2012.
• C. The equilibrium price of motor vehicles in 2012.
• D. The total deadweight loss resulting from motor vehicle crashes in 2012.

Answer: (D)

Verified step by step guidance

1. Understand the concept of economic surplus, which includes consumer surplus and producer surplus. Economic surplus measures the total benefit to society from the production and consumption of goods or services.
2. Recognize that a loss in economic surplus due to an event (like motor vehicle crashes) typically refers to a deadweight loss, which is the loss of total surplus that occurs when the market is not operating efficiently.
3. Identify that the \$26,000 figure represents an economic loss, meaning it is not a gain in consumer or producer surplus, nor is it a price measure. Instead, it quantifies the reduction in total welfare caused by crashes.
4. Recall that deadweight loss is the loss of total surplus (consumer plus producer surplus) that results from inefficiencies such as accidents, taxes, or externalities, which cause the market outcome to deviate from the social optimum.
5. Conclude that the \$26,000 economic loss most likely represents the total deadweight loss from motor vehicle crashes in 2012, reflecting the inefficiency and welfare loss to society.