Why does the consumer surplus lost, because monopolists restrict the production of output, represent a welfare loss?
A) because consumers pay a higher price than they would in a more competitive market
B) because it is transferred to producers in the form of profit
C) because the consumers will not have to pay tax on the lost consumer surplus
D) because society is not using its scarce resources in the best way possible

Question

Quizplus · Accepted Answer

The welfare loss occurs because the monopolist's restriction of output leads to an inefficient allocation of resources, where the potential benefits to society from additional production are not realized.

Why Does the Consumer Surplus Lost, Because Monopolists Restrict the Production