Which Statement Best Explains the Welfare Cost of Monopoly

question 34

Multiple Choice

Which statement best explains the welfare cost of monopoly

• A)The benefits that accrue to a monopoly firm's owners are equal to the costs that are incurred by consumers of that firm's product.
• B)The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing monopoly firm produces a quantity of output that exceeds the socially efficient quantity.
• C)The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
• D)The main social problem caused by monopoly is monopoly profit.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income or loss.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Balance Sheet

A summary report of a company's financial position, detailing assets, liabilities, and equity of shareholders at a certain moment.

Accrual Accounting

Accrual accounting is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.