Quantity discounts have the potential to ____ deadweight loss compared to the practice of charging a constant price for all output in a monopoly.
A)increase
B)eliminate
C)decrease
D)not change
E)increase and then decrease

Question

Quizplus · Accepted Answer

Quantity discounts can decrease deadweight loss compared to the practice of charging a constant price for all output in a monopoly because they can incentivize consumers to purchase more units at a lower price. This increases overall output and can reduce the gap between the monopoly price and the competitive price, which in turn reduces deadweight loss.

Quantity Discounts Have the Potential to ____ Deadweight Loss Compared