question archive Which of the following are effects of a monopoly? A
Which of the following are effects of a monopoly? A
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Which of the following are effects of a monopoly?
A. A monopoly causes an increase in producer surplus.
B. A monopoly causes a reduction in economic efficiency.
C. A monopoly causes a reduction in consumer surplus.
D. All of the above
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B. A monopoly causes a reduction in economic efficiency.
In a monopoly, the sole producer produces to a point where marginal revenue is equal to marginal cost, and then charges a price above marginal cost. As a result, the output in a monopoly is lower than that in a competitive market, meaning that there is lost in total surplus.
