Which of the following statements comparing monopoly withcompetition is correct?

Question

Which of the following statements comparing monopoly withcompetition is correct? a. A monopolist produces a higher level of output and chargesa lower price than a competitive firm would. b.With perfect price discrimination,k the total surplus undermonopoly can be the same as under competition. c.With or without price discriminationn, the consumer surplusunder monopoly is at least as large as it would be undercompetition. d. The deadweight loss associated with monopoly is caused bythe positive economic profits of the monopolist: competitve firmsdo not earn a positive economic profit, so there is no deadweightloss under competition. Which of the following statements comparing monopoly withcompetition is correct? a. A monopolist produces a higher level of output and chargesa lower price than a competitive firm would. b.With perfect price discrimination,k the total surplus undermonopoly can be the same as under competition. c.With or without price discriminationn, the consumer surplusunder monopoly is at least as large as it would be undercompetition. d. The deadweight loss associated with monopoly is caused bythe positive economic profits of the monopolist: competitve firmsdo not earn a positive economic profit, so there is no deadweightloss under competition.

Explanation / Answer

D.The deadweight loss associated with monopoly is caused by thepositive economic profits of the monopolist; competitive firms donot earn a positive economic profit, so there is no deadweight lossunder competition. Explanation competitive firms are price takers and there is no economic profitsin the long run.Monopoly causes a deadweight loss of benefits,otherwise would be enjoyed if the market is perfectlycompetitive.

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