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Deadweight loss of a monopoly

Explain why the deadweight loss of a monopoly may vary from standard estimates.

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In the below section, the deadweight losses in monopoly is explained. These are the losses that occur due to inefficiencies in the economy. There are several reasons behind the deviation from the standard estimates of these losses. The parameters responsible for these variations are also discussed.

Deadweight loss represents the net loss to the society due to economic inefficiency. Resource misallocation leads to economic inefficiency. It is the loss on the part of consumers but nobody gains from these losses. In a monopoly, there is only one seller that owns a key resource or has exclusive rights to produce or have any technical advantage. The output is reduced ...

Solution Summary

Detailed response to the query with references. In the below section, the deadweight losses in monopoly is explained. These are the losses that occur due to inefficiencies in the economy. There are several reasons behind the deviation from the standard estimates of these losses. The parameters responsible for these variations are also discussed.

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