Because the small-country monopolist loses the ability to control the market price, consumers enjoy more quantity, competitive prices, and:

Question

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The loss of market power by the small-country monopolist leads to a reduction in their producer surplus. This transfer of surplus from the monopolist to the consumers results in an increase in consumer surplus. Therefore, the consumers benefit with higher consumer surplus as a result of reduced producer surplus for the monopolist. Choice A is not necessarily true in all cases, and choices B and D are incorrect.

Because the Small-Country Monopolist Loses the Ability to Control the Market