Consumer surplus is the largest for

A. a single-price monopoly.

B. a perfectly competitive industry.

C. any price-discriminating monopoly.

D. a perfectly price-discriminating monopoly.

Answer: B

Monopolies earn positive economic profit by transferring some or all of consumer surplus into producer surplus. In a perfectly competitive market economic profits are 0, output is maximized, and price is the lowest. Thus, a perfectly competitive market will have the larger consumer surplus of any monopoly.