Deadweight loss results in a monopoly because:
A) the monopolist charges a price equal to marginal cost, which is higher than the price charged in a competitive market.
B) the monopolist produces a quantity that is higher than the quantity produced in a competitive market.
C) the monopolist makes a positive economic profit in the short run.
D) the monopolist charges a price below marginal cost.
E) some consumers who would benefit from a competitive market lose out.

Question

Quizplus · Accepted Answer

Deadweight loss results in a monopoly because some consumers who would benefit from a competitive market lose out. A monopoly restricts output and charges a higher price than what would be charged in a competitive market. As a result, some consumers who would be willing to pay the competitive price do not purchase the good or service at the higher monopoly price, leading to a loss of economic surplus for both consumers and producers. This loss of economic surplus is known as deadweight loss.

Deadweight Loss Results in a Monopoly Because