The pricing in monopoly prevents some mutually beneficial trades from taking place.The value of these unrealized mutually beneficial trades is called:
A) sunk costs.
B) opportunity costs.
C) a deadweight loss.
D) inequities.

Question

Quizplus · Accepted Answer

A deadweight loss refers to the loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or when the marginal benefit does not equal the marginal cost. In the case of monopoly pricing, some customers may be willing to pay a higher price for the good than the monopoly is charging, but are unable to do so due to the lack of competition. This results in a deadweight loss, as mutually beneficial trades are not taking place.

The Pricing in Monopoly Prevents Some Mutually Beneficial Trades from Taking