Which of the following represents the nature of a monopolist's deadweight loss?
A) It is not possible to equate price with marginal cost when demand is inelastic.
B) It is a fact that people are willing to spend a lot of money for small improvements in quality.
C) Some consumers are willing to pay more than the monopolist's marginal cost of production, but the monopolist does not produce these units.
D) Unlike competitive markets, there are consumers with unsatisfied wants.

Question

Quizplus · Accepted Answer

A monopolist restricts output to increase market power, leading to consumers who are willing to pay more than the marginal cost of production but are not being served. This leads to a deadweight loss, which is the loss of consumer and producer surplus due to the monopolist charging a higher price and producing less output than what would occur under perfect competition. Options A, B, and D are incorrect as they do not accurately describe the nature of a monopolist's deadweight loss.

Which of the Following Represents the Nature of a Monopolist's