-The figure above shows the market for milk. If one firm owns all the milk outlets in the city and sells 100 gallons of milk
A) the market is efficient because the marginal social benefit from the last gallon of milk exceeds its marginal social cost.
B) the market is efficient because the total social benefit from milk exceed the total social cost.
C) there is a deadweight loss because the marginal social benefit from the last gallon of milk exceeds its marginal social cost.
D) there is a deadweight loss because the marginal social cost of the last gallon of milk exceeds its marginal social benefit.

Question

-The figure above shows the market for milk. If one firm owns all the milk outlets in the city and sells 100 gallons of milk
A) the market is efficient because the marginal social benefit from the last gallon of milk exceeds its marginal social cost. 
B) the market is efficient because the total social benefit from milk exceed the total social cost. 
C) there is a deadweight loss because the marginal social benefit from the last gallon of milk exceeds its marginal social cost. 
D) there is a deadweight loss because the marginal social cost of the last gallon of milk exceeds its marginal social benefit.

Quizplus · Accepted Answer

When one firm owns all the milk outlets, it creates a monopoly, leading to reduced output and higher prices. This results in a deadweight loss because the marginal social benefit exceeds the marginal social cost for the last gallon sold.

-The Figure Above Shows the Market for Milk