Which of the following markets will have the largest deadweight loss?
A) A market that consists of a perfect price- discriminating monopoly.
B) A market that consists of competitive firms.
C) A market that consists of a single- price monopoly.
D) None of the above. There is no deadweight loss as long as firms produce at the level of output where marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

A single-price monopoly will have the largest deadweight loss because it does not produce at the socially optimal output level where price equals marginal cost, leading to a loss of allocative efficiency.

Which of the Following Markets Will Have the Largest Deadweight