Consider the monopoly in the above graph with price regulated at $2 per unit.Deadweight loss resulting from the unregulated monopoly price is _________ than the deadweight loss resulting from the regulated price.
A)greater
B)less
C)no different
D)There is insufficient information to determine the difference in the deadweight loss between the regulated and unregulated prices

Question

Quizplus · Accepted Answer

In an unregulated monopoly, the price is typically higher and the quantity lower than in a competitive market, leading to a larger deadweight loss. Regulating the price at $2 per unit likely reduces the price closer to the competitive level, decreasing the deadweight loss compared to the unregulated monopoly price.

Consider the Monopoly in the Above Graph with Price Regulated