Questions: Question 23 (1 point) Listen Monopoly creates Deadweight loss because it produces an output which is more than perfect competition it produces an output which costs less than perfect competition it produces an output which is less than perfect competition it produces an output which costs more than perfect competition

The answer is it produces an output which is less than perfect competition.

This option is incorrect. In a monopoly, the firm restricts output to maximize profits, which is less than what would be produced in a perfectly competitive market.

This option is incorrect. Monopolies often have higher costs due to lack of competitive pressure to minimize costs, and they do not necessarily produce at a lower cost than perfect competition.

This option is correct. A monopoly restricts output to raise prices above marginal cost, leading to a lower quantity of goods produced compared to a perfectly competitive market. This reduction in output results in a deadweight loss, as there are potential trades that would benefit both consumers and producers that do not occur.

While this can be true in terms of price, the key reason for deadweight loss is the reduced output, not necessarily the cost of production. Monopolies charge higher prices, but the deadweight loss is primarily due to the lower quantity produced.