question archive What can measure the economic inefficiency of a monopolist? a
What can measure the economic inefficiency of a monopolist? a
Subject:MarketingPrice:2.88 Bought3
What can measure the economic inefficiency of a monopolist?
a. The number of consumers who are unable to purchase the product because of its high price.
b. The excess profit generated by monopoly firms.
c. The poor quality of service offered by monopoly firms.
d. The deadweight loss.
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- The correct option is (d) - The deadweight loss.
Although, a monopolist produces its quantity wherein both the marginal revenue from selling an additional unit is same as the marginal cost of producing an additional unit, yet the price charged by a monopolist is according to the demand by the consumers; therefore, this creates economic inefficiency in the market which is usually known as the deadweight loss.
