The deadweight loss of monopoly is
A)its fixed cost.
B)any negative profit due to cyclical decreases in demand.
C)the loss of economic surplus due to the low monopoly output level.
D)the cost of maintaining effective barriers to entry.
E)the extra administrative costs of operating a large firm.

Question

Quizplus · Accepted Answer

Deadweight loss of monopoly refers to the loss of economic surplus which occurs due to the low output level of the monopoly. This occurs because the monopolist charges a higher price than what would be charged under perfect competition, resulting in fewer units being produced and consumed. This reduction in output creates a situation where the total surplus of producer and consumer is lower than what would be achieved under perfect competition. Therefore, option C is the correct answer.

The Deadweight Loss of Monopoly Is