Why Does a Monopoly Cause a Deadweight Loss

question 37

Multiple Choice

Why does a monopoly cause a deadweight loss?

• A)because it stops producing output at a point where price is above marginal cost
• B)because it appropriates a portion of consumer surplus for itself
• C)because it increases producer surplus at the expense of consumer surplus
• D)because it does not produce some output for which demand exceeds supply

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Definitions:

Early Withdrawal Penalty

A charge applied for taking money out of a financial account or investment before a set date or term has ended.

Spreadsheet

A digital document that uses rows and columns to organize data, calculations, and information, commonly used in accounting and financial analysis.

Multiplier

A factor used in economics to quantify the effect of investment spending on the aggregate income or output of an economy.

Full Retirement Age

Age at which a person receives full retirement Social Security benefits.