The economic inefficiency of a monopolist can be measured by the
A)deadweight loss.
B)value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
C)area above marginal cost but beneath demand from the monopoly output to the socially-efficient output.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the options listed are correct ways to measure the economic inefficiency of a monopolist. The deadweight loss represents the value of lost trades that could have occurred at a lower price and higher quantity if the monopolist had produced the socially-efficient output. The area above marginal cost but beneath demand represents the lost consumer surplus due to the monopolist charging a price higher than the marginal cost. Therefore, all of these measures are important in understanding the inefficiency of monopolies.

The Economic Inefficiency of a Monopolist Can Be Measured by the