Consumer surplus
A)exists when a monopolist practices perfect price discrimination.
B)equals price minus marginal cost.
C)is less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
D)equals zero for a single-price monopolist.
E)is greater in a single-price monopoly than in a perfectly competitive industry.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually have to pay. In a single-price monopoly, the monopolist charges a price that is greater than the marginal cost, which reduces consumer surplus compared to a perfectly competitive industry where prices are equal to marginal cost. Therefore, option C is correct. Options A, B, D, and E are incorrect because they do not accurately define consumer surplus.

Consumer Surplus