In the Market for Jiggly Wigs, the Profit-Maximising Monopolist Is

Multiple Choice

In the market for Jiggly Wigs, the profit-maximising monopolist is charging a price $2 higher than marginal cost.Suppose instead of a monopoly this market was competitive, but the government placed a $2 tax on the competitive price of the good.What can we say about the relative dead-weight losses in the long-run?

A) the dead-weight loss from monopoly pricing will always be higher
B) the dead-weight loss from the tax will always be higher
C) the dead-weight loss will be equal in both cases
D) we cannot say without more information about the marginal cost curve