Monopoly results in a welfare loss because:
A) marginal revenue does not equal marginal cost.
B) the monopolist restricts output below the socially efficient level.
C) average variable cost is not minimized.
D) total cost is not minimized.

Question

Quizplus · Accepted Answer

Monopoly results in a welfare loss because the monopolist restricts output below the socially efficient level, which creates deadweight loss in the market. This means that there is less total surplus in the economy than there would be under perfect competition, and some consumers and producers are worse off as a result. Options A, C, and D may be true in certain situations, but they do not necessarily result in a welfare loss.

Monopoly Results in a Welfare Loss Because