Which of the following markets will have the largest deadweight loss?
A) A market that consists of perfectly competitive firms.
B) A market that consists of a single-price monopoly.
C) A market that consists of a perfect price discriminating monopoly.
D) None of the above. There is no deadweight loss as long as firms produce at the level of output where marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

A single-price monopoly creates a deadweight loss because it restricts output below the socially optimal level, where marginal cost equals marginal benefit, leading to a loss of total welfare.

Which of the Following Markets Will Have the Largest Deadweight