Why is area C in Figure 14-5 not considered a loss to society from monopoly? PM Pc
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Why is area C in Figure 14-5 not considered a loss to society from monopoly?
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PM Pc Price 0 Marginal cost FIGURE 14-5 The Welfare Loss from Monopoly The welfare loss from a monopoly is repre- sented by the triangles B and D. The rect- angle C is a transfer from consumer surplus to the monopolist. The area A represents the opportunity cost of diverted resources. This is not a loss to society since the resources will be used in producing other goods. DB A Demand MR Qc 0 QM Quantity
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Area C represents the profit going to a mo...View the full answer
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