The following graph shows the market faced by a monopolist. Suppose the government decides to give monopoly power to one firm in the industry through an exclusive license. The welfare loss due to monopoly would be equal to the area _____.
Figure 16.5

Question

The following graph shows the market faced by a monopolist. Suppose the government decides to give monopoly power to one firm in the industry through an exclusive license. The welfare loss due to monopoly would be equal to the area _____.​ ​
Figure 16.5
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Quizplus · Accepted Answer

The welfare loss due to monopoly is represented by the deadweight loss (DWL). In the graph above, the area of DWL is equal to the triangle formed by points A, B, and C. Therefore, the welfare loss due to monopoly would be equal to area (e), which is equal to area (c).

The Following Graph Shows the Market Faced by a Monopolist