monopoly deadweight welfare loss

• Monopolies cause a deadweight welfare loss because compared to competitive outcomes they reduce the total level of surplus
• The marginal cost curve in a monopoly diagram is equal to supply.
• What area represents consumer surplus under competitive outcomes in a monopoly diagram?

  A + B + C
• Under monopoly, consumer surplus is reduced to area A
• What areas represent the loss of consumer surplus in a monopoly compared to competitive outcomes?

  B and C
• Producer surplus under competitive outcomes is represented by areas D + E
• In a monopoly, producer surplus includes the area beneath the price line but above the marginal cost curve within the monopolist's quantity.
• What area represents producer surplus under monopoly in the diagram?

  B + D
• Society surplus under competitive outcomes is the sum of consumer and producer surplus, which is area A + B + C + D + E
• Area B is considered a deadweight loss because it is lost in consumer surplus but regained in producer surplus under monopoly.

  False
• Which areas represent deadweight welfare loss in a monopoly diagram?

  C and E
• The deadweight welfare loss of consumer surplus is represented by area C
• What is the primary concern with monopolies regarding consumer surplus?

  Exploitation via higher prices
• Monopolies reduce the total level of society surplus compared to competitive outcomes.
• Deadweight welfare loss occurs because it represents non-recovered losses of welfare