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The reason monopolies are inefficient for society is because monopolies: a. Make large profits b. Create...

The reason monopolies are inefficient for society is because monopolies:

a. Make large profits

b. Create no consumer surplus

c. Create deadweight loss

d. Increase total surplus

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Homework Answers

Answer #1

Option C

  • A dead weight loss is also referred to as an allocative inefficiency that is usually caused when the resources are not allocated in an efficient manner which can lead to loss in both producer and consumer surplus.
  • A monopoly is a market structure characterised by a single firm selling unique goods and services.
  • This firm creates dead weight loss as it does not achieve free market equilibrium for goods and services due to higher prices set for its goods and services which can lead to loss of Economic efficiency.
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