The deadweight loss from monopoly pricing is
A) The amount by which aggregate surplus falls short of its minimum possible value, which is attained in a perfectly competitive market
B) The amount by which consumer surplus exceeds producer surplus
C) The amount by which aggregate surplus falls short of its maximum possible value, which is attained in a perfectly competitive market
D) The amount by which producer surplus exceeds consumer surplus

Question

Quizplus · Accepted Answer

The deadweight loss from monopoly pricing is the reduction in total surplus that results from the monopoly pricing above marginal cost. It represents the amount by which aggregate surplus falls short of its maximum possible value, which is attained in a perfectly competitive market where price equals marginal cost. Therefore, option C is correct. The other options are inaccurate definitions of deadweight loss.

The Deadweight Loss from Monopoly Pricing Is