<p>Yes, there is an explanation: some books are poorly written.</p>
<p>They probably mean that the subsidy is small, so the monopoly's subsidized production does not overshoot the competitive equilibrium production quantity, in which case total welfare is indeed not decreased, and is in most subcases, increased.</p>

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2024-04-28T07:20:00.543Z
Hope my answer helps you, [penguin friend](https://economics.stackexchange.com/users/45245/asdf).
Giskard
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2024-04-28T07:17:27.293Z
2024-04-28T07:17:27.293Z
Giskard
<p>When a per-unit subsidy is given to a monopoly, the marginal cost curve will shift downwards. It is unclear to me how this will affect deadweight loss, however. I can draw examples where the DWL decreases as a result, and other examples where the DWL increases.</p>
<p>According to book I'm learning from, the DWL will decrease. Is there any explanation for this?</p>

<microeconomics>
Changes in deadweight loss in a monopoly
asdf
# Changes in deadweight loss in a monopoly

(Asked by: username_0 on 2024-04-28)

When a per-unit subsidy is given to a monopoly, the marginal cost curve will shift downwards. It is unclear to me how this will affect deadweight loss, however. I can draw examples where the DWL decreases as a result, and other examples where the DWL increases.

According to book I'm learning from, the DWL will decrease. Is there any explanation for this?

**Tags:** microeconomics


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## 1 answers

### Answer by username_1 on 2024-04-28. Score: 1

Yes, there is an explanation: some books are poorly written.

They probably mean that the subsidy is small, so the monopoly's subsidized production does not overshoot the competitive equilibrium production quantity, in which case total welfare is indeed not decreased, and is in most subcases, increased.

> **Comments:**
> **username_1**: Hope my answer helps you, [penguin friend](https://economics.stackexchange.com/users/45245/username_0).  

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