The efficiency loss that occurs when a market is monopolized is known as:
A)a deadweight loss.
B)a monopoly loss.
C)an economic loss.
D)an X-loss.
E)a capital loss.

Question

Quizplus · Accepted Answer

A deadweight loss occurs when a market is monopolized, meaning that the producer has control over the price and quantity of goods or services. This leads to a reduction in the overall welfare of society, resulting in inefficiency and waste. The monopolist charges higher prices than would exist in a competitive market, resulting in lost consumer surplus and a reduction in quantity supplied. The deadweight loss represents the difference between the value of goods or services to consumers and the costs associated with producing them, both of which are not realized due to monopoly power.

The Efficiency Loss That Occurs When a Market Is Monopolized