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The economic inefficiency of a monopolist can be measured by

The economic inefficiency of a monopolist can be measured by

A. The number of consumers who are unable to purchase the product because of its high price.

B. The poor quality of service offered by monopoly firms.

C. The excess profit generated by monopoly firms.

D. The dead weight loss.

A

The answer is D.

Explanation:

The monopoly market is characterized by the high entry barriers and a single seller (monopolist) in a market with lots of buyers.

In turn, the deadweight loss arises from a situation where the potential gains failed to go to the consumer or producer. Provided that the combined surplus under the monopoly is less than in the competitive market, its inefficiency can be measured by the deadweight loss.

2 months ago
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