Why are the estimates of the deadweight loss of monopoly not large?
A)Monopolized sectors of the economy are large relative to the whole economy.
B)Pure monopolies are not pervasive in market economies.
C)Monopolies tend to operate in markets with below average prices.
D)Although consumer surplus falls,total surplus actually increases in a monopoly.

Question

Quizplus · Accepted Answer

While monopoly power does exist in some sectors of the economy, pure monopolies are not pervasive in market economies. Furthermore, the deadweight loss of a monopoly is not necessarily large and depends on several factors such as the level of market power, elasticity of demand, and the ability of firms to innovate. Therefore, while some monopoly situations may result in significant deadweight loss, this is not always the case.

Why Are the Estimates of the Deadweight Loss of Monopoly