{"id":45809,"date":"2024-04-15T22:03:21","date_gmt":"2024-04-15T22:03:21","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=45809"},"modified":"2024-04-15T22:03:21","modified_gmt":"2024-04-15T22:03:21","slug":"a-welfare-loss-occurs-in-monopoly-where","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/a-welfare-loss-occurs-in-monopoly-where\/","title":{"rendered":"A welfare loss occurs in monopoly where"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;the price is greater than the marginal cost&#8221; option2=&#8221;the price is greater than the marginal benefit&#8221; option3=&#8221;the price is greater than the average revenue&#8221; option4=&#8221;the price is greater than the marginal revenue&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is: A. the price is greater than the marginal cost.<\/p>\n<p>A welfare loss occurs in monopoly when the price is greater than the marginal cost. This is because the monopoly firm produces less output than would be produced in a competitive market, and consumers are therefore willing to pay more for the output that is produced. The difference between the price and the marginal cost is the deadweight loss, which is a measure of the inefficiency that results from monopoly power.<\/p>\n<p>The other options are incorrect because they do not necessarily lead to a welfare loss. For example, if the price is greater than the marginal benefit, this could simply mean that consumers are not willing to pay as much for the good as the firm is willing to produce. This would not necessarily be a problem, as long as the firm is still producing at a point where marginal cost is equal to marginal revenue.<\/p>\n<p>Similarly, if the price is greater than the average revenue, this could simply mean that the firm is not very efficient. However, as long as the firm is still producing at a point where marginal cost is equal to marginal revenue, there would not necessarily be a welfare loss.<\/p>\n<p>Finally, if the price is greater than the marginal revenue, this could simply mean that the firm is facing a downward-sloping demand curve. This would not necessarily be a problem, as long as the firm is still producing at a point where marginal cost is equal to marginal revenue.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;the price is greater than the marginal cost&#8221; option2=&#8221;the price is greater than the marginal benefit&#8221; option3=&#8221;the price is greater than the average revenue&#8221; option4=&#8221;the price is greater than the marginal revenue&#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-45809","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A welfare loss occurs in monopoly where<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/a-welfare-loss-occurs-in-monopoly-where\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A welfare loss occurs in monopoly where\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;the price is greater than the marginal cost&#8221; 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