Asked by Shalara Santana on May 23, 2024
Verified
Refer to Figure 10.4.3. In moving from the competitive level of output and price to the monopoly level of output and price, the deadweight loss is the area:
A) QmEHQc.
B) GEH.
C) GFH.
D) FEH.
E) none of the above
Deadweight Loss
The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.
Competitive Level
The degree of competition within a market, characterized by the number of firms, product differentiation, and barriers to entry.
- Analyze the consequences of monopoly power on the economic surplus for consumers and producers and its ramifications for community wellbeing.
Verified Answer
SR
Steven RickettsMay 30, 2024
Final Answer :
B
Explanation :
The deadweight loss due to the transition from a competitive market to a monopoly is represented by the area between the demand curve and the marginal cost curve, from the competitive quantity to the monopoly quantity. This area is typically labeled as the triangle formed by these points, which is GEH in standard economic diagrams.
Learning Objectives
- Analyze the consequences of monopoly power on the economic surplus for consumers and producers and its ramifications for community wellbeing.