How does the inefficiency of a deadweight loss come about
A)Consumers who still buy the product at the higher price will be worse off due to the loss of its consumer surplus.
B)Consumers who still buy the product at the high price are worse off than they would be if they paid a lower price.
C)Consumers buy fewer units due to the monopoly price, which exceeds the socially optimal price.
D)Consumers buy more units due to the monopoly price, which is less than the socially optimal price.

Question

Quizplus · Accepted Answer

Deadweight loss is caused by a market inefficiency where the quantity demanded and quantity supplied are not at the socially optimal level. In the case of a monopoly, the higher price that consumers have to pay reduces the quantity demanded, resulting in a lower surplus for both consumers and producers. This reduction in quantity transacted causes a deadweight loss, which represents a loss of overall welfare to society. Therefore, consumers buy fewer units due to the monopoly price, which exceeds the socially optimal price, and this leads to deadweight loss.

How Does the Inefficiency of a Deadweight Loss Come About