Figure 15-10

-Refer to Figure 15-10.The deadweight loss due to a monopoly is represented by the area

Question

Figure 15-10
 
-Refer to Figure 15-10.The deadweight loss due to a monopoly is represented by the area

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. As a result, consumers are willing to pay more for the good than the monopoly is charging, but they are unable to do so because the monopoly has restricted output. The area FHE represents the difference between the price consumers are willing to pay and the price they actually pay, and it is a measure of the deadweight loss due to the monopoly.

Figure 15-10 -Refer to Figure 15-10.The Deadweight Loss Due to a Monopoly