Figure 10-12
Figure 10-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-12.If the firm maximizes its profits,the deadweight loss to society due to this monopoly is equal to the area
A) ABF.
B) ABEG.
C) ACE.
D) EFG.

Question

Figure 10-12
  Figure 10-12 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-12.If the firm maximizes its profits,the deadweight loss to society due to this monopoly is equal to the area
A) ABF. 
B) ABEG. 
C) ACE. 
D) EFG.

Quizplus · Accepted Answer

The deadweight loss in a monopoly is the loss of economic efficiency when the equilibrium outcome is not achieved. It is represented by the area between the demand curve and the marginal cost curve, from the quantity produced by the monopoly to the socially optimal quantity. In this case, it is the area ACE.

Figure 10-12 Figure 10-12 Shows the Cost and Demand Curves