An Appropriate Way to Measure the Economic Inefficiency of a Monopoly

question 186

Multiple Choice

An appropriate way to measure the economic inefficiency of a monopoly is the:

• A)number of consumers who are unable to purchase the product because of its high price
• B)deadweight loss
• C)low wages paid to the monopolist's workers
• D)poor quality of service offered by monopoly firms

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Definitions:

Relatively Elastic

Refers to a situation where the quantity demanded or supplied of a good changes significantly in response to changes in price.

Percentage Increase

calculates the rate at which a quantity grows over a period, expressed as a fraction of its original value.

Elastic

Describes a scenario where a small change in price leads to a large change in quantity demanded or supplied.

Inelastic

describes a situation where the demand or supply for a good is not significantly affected by changes in price.