Under monopoly, the portion of the outgoing consumer surplus that is not transferred to the monopoly firm or still considered consumer surplus is:
A) known as deadweight loss.
B) proof that monopolies should not be allowed.
C) transferred to the government.
D) available to third parties who benefit from sales of the monopolist's output.

Question

Quizplus · Accepted Answer

The portion of the outgoing consumer surplus that is not transferred to the monopoly firm and is not considered consumer surplus anymore is known as deadweight loss. This is because it represents the loss of potential welfare that could have been achieved if the market was competitive instead of monopolized.

Under Monopoly, the Portion of the Outgoing Consumer Surplus That