The fundamental reason a single-price monopoly creates a deadweight loss is that compared to the efficient outcome, the single-price monopoly
A) raises variable cost.
B) raises fixed cost.
C) restricts output.
D) reduces the elasticity of demand.

Question

Quizplus · Accepted Answer

A single-price monopoly creates a deadweight loss because it restricts output to maximize profits, leading to a quantity that is less than the socially efficient level where marginal cost equals marginal benefit.

The Fundamental Reason a Single-Price Monopoly Creates a Deadweight Loss