If the government allowed only one airline to serve the entire U.S. market, there would be a _____ loss associated with _____ efficiency in the airline industry.
A) marginal; reduced
B) deadweight; reduced
C) total; increased
D) deadweight; increased

Question

Quizplus · Accepted Answer

A deadweight loss is a loss in economic efficiency that occurs when the market price of a good or service is not equal to its marginal cost. In this case, if the government allowed only one airline to serve the entire U.S. market, the airline would have a monopoly and would be able to charge a higher price than the marginal cost of providing the service. This would result in a deadweight loss, as some consumers would be willing to pay more for the service than the airline is charging, but they would not be able to do so because the airline is not providing enough service to meet demand.

If the Government Allowed Only One Airline to Serve the Entire