On a remote highway in western Colorado, Brendan operates the only gas station within 80 miles of the nearest town. Because of the lack of competition, prices in this market will be _____ than in a competitive market, resulting in _____ deadweight loss.

Question

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In a market with little to no competition, prices tend to be higher because the single seller can exert significant control over the market price. This situation often leads to greater deadweight loss because the higher prices reduce the quantity of the good sold, leading to inefficiencies in the market where some consumer surplus and producer surplus are not realized.

On a Remote Highway in Western Colorado, Brendan Operates the Only