The equilibrium price and quantity in a monopoly market:
A)is efficient.
B)is the same as in a perfectly competitive market.
C)causes a loss of total surplus.
D)causes no welfare costs.

Question

Quizplus · Accepted Answer

Monopolies restrict output below the socially optimal level, leading to higher prices and a deadweight loss, which represents a loss of total surplus in the market. This is because the monopoly sets the price higher than marginal cost, which is inefficient from a societal perspective.

The Equilibrium Price and Quantity in a Monopoly Market