If a perfectly competitive industry is monopolized, consumer surplus
A)can be expected to decrease
B)will usually remain constant
C)can be expected to increase
D)drops from a high value to zero
E)increases from zero to a high value

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, the market price is determined by the intersection of the supply and demand curves, and consumers pay a price that reflects the marginal cost of production. If the industry is monopolized, the monopolist has the power to increase the price above the marginal cost, leading to a decrease in consumer surplus. In other words, monopolization reduces the welfare of consumers by reducing the net benefit they receive from consuming products in the industry.

If a Perfectly Competitive Industry Is Monopolized, Consumer Surplus