The deadweight loss arising from the monopolization of a perfectly competitive industry is:
A)the transfer of consumer's surplus to the monopolist in the form of economic profit.
B)the reduction in quantity supplied and the increase in product price.
C)the gain in producer's surplus minus the loss in consumer's surplus.
D)the net reduction in both consumer's and producer's surplus which is not captured by anyone.

Question

Quizplus · Accepted Answer

Deadweight loss in the context of monopolization refers to the net reduction in total (consumer plus producer) surplus that occurs because the monopolist produces less and charges more than a competitive industry would, leading to inefficiencies in the market. This loss is not captured by anyone, unlike transfers of surplus from consumers to producers.

The Deadweight Loss Arising from the Monopolization of a Perfectly