The deadweight loss that is associated with a monopolistically competitive market is a result of
A)price falling short of marginal cost in order to increase market share.
B)price exceeding marginal cost.
C)the firm operating in a regulated industry.
D)excessive advertising costs.

Question

Quizplus · Accepted Answer

In monopolistically competitive market, the firms have some degree of market power and can charge a price above their marginal cost, resulting in a deadweight loss to society. This is because the quantity demanded decreases as the price increases, leading to a reduction in overall social welfare.

The Deadweight Loss That Is Associated with a Monopolistically Competitive