The social loss created by monopoly power depends upon the price elasticity of the monopolist's supply curve.

Question

Quizplus · Accepted Answer

The social loss created by monopoly power depends upon the price elasticity of demand for the monopolist's product, not the elasticity of the monopolist's supply curve. Elasticity of demand affects how much a monopolist can raise prices above marginal costs, which in turn affects the deadweight loss to society.

The Social Loss Created by Monopoly Power Depends Upon the Price