The following figure shows the demand (D), marginal cost (MC), and marginal revenue (MR) for a monopolist firm.

-Refer to the figure above.Refer to the figure above.Compared to the competitive market outcome,the single-price profit-maximizing monopoly reduces the social surplus by ________.

Question

The following figure shows the demand (D), marginal cost (MC), and marginal revenue (MR) for a monopolist firm.
 
-Refer to the figure above.Refer to the figure above.Compared to the competitive market outcome,the single-price profit-maximizing monopoly reduces the social surplus by ________.

Quizplus · Accepted Answer

The reduction in social surplus due to a monopoly is represented by the deadweight loss, which is the area of the triangle formed by the reduction in quantity from Q₃ to Q₁ and the price difference from P₁ to P₄.

The Following Figure Shows the Demand (D), Marginal Cost (MC)