Which of the following will result in the largest deadweight loss?
A) A natural monopoly regulated with marginal cost pricing
B) A natural monopoly regulated with average cost pricing
C) An unregulated natural monopoly
D) All of the above result in the same deadweight loss.

Question

Quizplus · Accepted Answer

An unregulated natural monopoly often results in the largest deadweight loss because the monopoly can set prices above marginal costs, reducing quantity sold below the socially optimal level, thus creating inefficiency in the market.

Which of the Following Will Result in the Largest Deadweight