Deadweight loss from monopoly power is expressed on a graph as the area between the:

Question

Quizplus · Accepted Answer

The deadweight loss from monopoly power is the loss of consumer and producer surplus that occurs when a monopolist restricts output from the competitive level to the monopoly level, in order to increase price and profit. This loss is equal to the area between the demand curve (or average revenue curve) and the marginal cost curve, bounded by the quantities produced by the competitive and monopoly markets. Therefore, the correct answer is D, which describes the area between the average revenue curve and the marginal cost curve bounded by the quantities produced by the competitive and monopoly markets.

Deadweight Loss from Monopoly Power Is Expressed on a Graph