Why is the monopoly total welfare lower than the competitive total welfare?
What will be an ideal response?
A monopoly restricts output relative to the competitive level. This generates a deadweight loss. Consumers value the units the monopolist does not produce more than the cost of producing those units. Thus, total welfare is lower with a monopolist.
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The free-rider problem can arise when consumption of a good is
A) rival. B) excludable. C) nonrival but excludable. D) nonexcludable.
In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of
a. omitted variables. b. reverse causality. c. government propaganda. d. medical incompetence.