Welfare loss occurs in a monopoly because:
A)marginal revenue exceeds 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.
E)the monopolist restricts the price below what would be charged under perfect competition.

Question

Welfare loss occurs in a monopoly because:​
A)marginal revenue exceeds 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.
E)the monopolist restricts the price below what would be charged under perfect competition.

Quizplus · Accepted Answer

In a monopoly, the monopolist restricts output below the socially efficient level in order to maximize profits. This leads to a welfare loss because goods and services that consumers would have been willing to buy at a lower price are not produced, and society as a whole is worse off as a result.

Welfare Loss Occurs in a Monopoly Because:​

Welfare Loss Occurs in a Monopoly Because: