question archive If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies? A
If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies? A
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If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?
A. The producer and society benefit, but consumers are harmed.
B. The producer and society are harmed, but consumers benefit.
C. The producer is harmed, but consumers and society benefit.
D. The producer benefits, but consumers and society are harmed.
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The correct option is: D. The producer benefits, but consumers and society are harmed.
If perfectly competitive markets are turned into a monopoly, there will be only one seller. The monopolist will be in a position to exploit consumers. Consumers will have no other options to purchase goods and services. There would be deadweight losses and, hence, the society and consumers will be harmed while the monopolist will enjoy complete control over the market.
