Figure 13.6

-Refer to Figure 13.6.The deadweight loss due to a monopoly is represented by the area
A) FHE.
B)FGE.
C)GEH.
D)FQ₁Q₂E.

Question

Figure 13.6
 
-Refer to Figure 13.6.The deadweight loss due to a monopoly is represented by the area
A) FHE. 
B)FGE. 
C)GEH. 
D)FQ₁Q₂E.

Quizplus · Accepted Answer

The deadweight loss due to a monopoly is represented by the area FHE. This is because the monopoly restricts output to Q1, which is less than the competitive output of Q2. This restriction leads to a higher price (P1) than the competitive price (P2), which results in a loss of consumer surplus (area FGE) and a loss of producer surplus (area GEH). The total deadweight loss is the sum of these two losses, which is represented by the area FHE.

Figure 13.6 -Refer to Figure 13.6.The Deadweight Loss Due to a Monopoly