FIGURE 12-3
-Refer to Figure 12-3. Comparing the perfectly competitive equilibrium to the monopoly equilibrium, the deadweight loss of monopoly is given by
A) q1BEq2.
B) AP4E.
C) q1CEq2.
D) ACE.
E) P2P4E.

Question

FIGURE 12-3
-Refer to Figure 12-3. Comparing the perfectly competitive equilibrium to the monopoly equilibrium, the deadweight loss of monopoly is given by
A) q1BEq2. 
B) AP4E. 
C) q1CEq2. 
D) ACE. 
E) P2P4E.

Quizplus · Accepted Answer

The deadweight loss of monopoly is represented by the area between the demand and supply curves that is lost due to the monopolist producing less than the socially optimal quantity. In this context, ACE represents the area of deadweight loss.

FIGURE 12-3 -Refer to Figure 12-3. Comparing the Perfectly Competitive Equilibrium to Equilibrium