What can measure the economic inefficiency of a monopolist
A)the number of consumers who are unable to purchase the product because of its high price
B)the excess profit generated by monopoly firms
C)the loss of producer surplus by monopoly firms
D)the deadweight loss

Question

Quizplus · Accepted Answer

Deadweight loss is the economic inefficiency caused by a monopolist. It refers to the loss of consumer and producer surplus that happens when a monopolist restricts output and charges a price higher than the competitive equilibrium price. Therefore, it is the most appropriate measure of the economic inefficiency of a monopolist. Option A may be a consequence of high prices, but it is not a direct measure of inefficiency. The excess profit generated by monopoly firms (Option B) is a measure of profit but does not necessarily indicate inefficiency. Option C, the loss of producer surplus, is only one part of the overall inefficiency caused by a monopolist.

What Can Measure the Economic Inefficiency of a Monopolist