Skip to main content
Back

Monopoly Efficiency and Deadweight Loss definitions

Control buttons has been changed to "navigation" mode.
1/14
  • Monopoly
    A market structure where a single firm restricts output to raise prices, resulting in higher profits and reduced market efficiency.
  • Perfect Competition
    A market scenario where many firms produce at minimum cost, ensuring price equals marginal and average total cost.
  • Consumer Surplus
    The area above market price and below the demand curve, representing the benefit buyers receive from paying less than their maximum willingness.
  • Producer Surplus
    The area below market price and above the supply curve, reflecting the benefit sellers gain from selling above their minimum acceptable price.
  • Total Surplus
    The sum of consumer and producer surplus, indicating the overall economic welfare generated in a market.
  • Deadweight Loss
    The lost economic value from trades that do not occur due to market inefficiency, often visualized as missing areas on a surplus graph.
  • Productive Efficiency
    A situation where goods are produced at the lowest possible cost, specifically at the minimum point of the average total cost curve.
  • Allocative Efficiency
    A condition where production matches consumer preferences, achieved when marginal benefit equals marginal cost.
  • Marginal Cost
    The additional expense incurred from producing one more unit, represented by the upward-sloping supply curve in competition.
  • Marginal Revenue
    The extra income a firm receives from selling one more unit, guiding output decisions in monopoly settings.
  • Average Total Cost
    The total cost per unit, minimized at productive efficiency and typically not reached by monopolies.
  • Market Power
    The ability of a firm to influence price and output, often leading to higher prices and restricted quantities.
  • Equilibrium Price
    The market-clearing value where quantity supplied equals quantity demanded, ensuring no surplus or shortage.
  • Efficient Quantity
    The output level where total surplus is maximized, with no deadweight loss present.