By reducing its output compared to a competitive market, a monopoly leads to
A) a deadweight loss.
B) external costs.
C) a more efficient use of resources.
D) external benefits.

Question

Quizplus · Accepted Answer

Monopolies reduce output to increase prices, leading to a deadweight loss because some consumers who value the product more than its cost of production do not buy it. This inefficiency is a loss to society.

By Reducing Its Output Compared to a Competitive Market, a Monopoly