A monopoly that is unregulated always causes deadweight loss.

Question

Quizplus · Accepted Answer

A monopoly operates with market power, allowing it to set higher prices and lower output levels than would be seen in a competitive market. This results in a deadweight loss, where the total surplus is lowered because some potential consumers may be priced out of the market and some potential producers will decide not to produce due to the lower quantity demanded. Without regulation, the monopoly has no incentive to reduce its market power and will continue to generate deadweight loss.

A Monopoly That Is Unregulated Always Causes Deadweight Loss