Exhibit 9-15
-Why might the true deadweight loss from a nondiscriminating monopolist be less than the loss indicated in Exhibit 9-15?
A) The monopolist might have diseconomies of scale
B) The monopolist might charge lower prices to discourage competition
C) The monopolist might engage in rent seeking
D) The monopolist might advertise more to maintain its position
E) The monopolist may face diminishing marginal returns

Question

Exhibit 9-15 
-Why might the true deadweight loss from a nondiscriminating monopolist be less than the loss indicated in Exhibit 9-15?
A) The monopolist might have diseconomies of scale 
B) The monopolist might charge lower prices to discourage competition 
C) The monopolist might engage in rent seeking 
D) The monopolist might advertise more to maintain its position 
E) The monopolist may face diminishing marginal returns

Quizplus · Accepted Answer

If the monopolist charges a lower price to discourage competition, it may attract more customers and increase sales, which could offset some of the deadweight loss.

Exhibit 9-15 -Why Might the True Deadweight Loss from a Nondiscriminating Monopolist