question archive In comparison with a perfect competition, a single-price monopolist with the same costs A
In comparison with a perfect competition, a single-price monopolist with the same costs A
Subject:MarketingPrice:2.88 Bought3
In comparison with a perfect competition, a single-price monopolist with the same costs
A. generates a larger consumer surplus and a larger economic profit.
B. generates a smaller consumer surplus but a larger economic profit.
C. generates a larger consumer surplus and a smaller economic profit.
D. generates a smaller consumer surplus and a smaller economic profit.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer: B
A single-price monopolist will artificially reduce output to boost prices and thus increase profits. This means the monopoly will earn a larger economic profit but since prices rose and quantity declined, consumer surplus must fall. In fact, the whole point of artificially reducing supply is to transfer some of the consumer surplus to producer surplus.
