Will the welfare loss from a monopolist with a perfectly elastic marginal cost c

ID: 1099029 • Letter: W

Question

Will the welfare loss from a monopolist with a perfectly elastic marginal cost curve be greater or less than the welfare loss from a monopolist with an upward-sloping marginal cost curve?

a.The welfare loss is less with constant marginal costs because suppliers have fewer other alternatives. b.The welfare loss is greater with constant marginal costs because the opportunity cost of providing additional units does not increase. c.The welfare loss is less with constant marginal costs because the opportunity cost of providing additional units does not increase. d.The welfare loss is greater with constant marginal costs because suppliers have fewer other alternatives.

Explanation / Answer

CORRECT ANSWER

b.The welfare loss is greater with constant marginal costs because the opportunity cost of providing additional units does not increase

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Will the welfare loss from a monopolist with a perfectly elastic marginal cost c

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