Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition __________ while in monopoly __________. A) P = MC;P MC B) P

Question

Perfect competition maximized total economic surplus and monopoly does not,because in perfect competition __________ while in monopoly __________.
A) P = MC;P > MC
B) P < MR;P = MR
C) P = MR;P < MR
D) P = MC;P < MC
E) P = MR;P = MC

Quizplus · Accepted Answer

In perfect competition, firms will produce where P = MC, which leads to allocative efficiency and maximizes total economic surplus. However, in a monopoly, the firm will produce where MR = MC, which results in a higher price (P > MC) and lower quantity produced, leading to a deadweight loss and a lower total economic surplus. Therefore, A is the correct choice as it accurately reflects the differences between perfect competition and monopoly in terms of maximizing total economic surplus.

Perfect Competition Maximized Total Economic Surplus and Monopoly Does Not,because