Compared to a similar perfectly competitive industry, a single-price monopoly
A) sets a lower price because there is less competition.
B) creates a deadweight loss and decreases consumer surplus.
C) produces more output.
D) creates a deadweight loss and decreases economic profit.
E) is more efficient because there is no wasteful competition.

Question

Quizplus · Accepted Answer

A single-price monopoly can charge a higher price and produce less output than a perfectly competitive industry. This leads to a deadweight loss and a decrease in consumer surplus as some potential buyers are priced out of the market.

Compared to a Similar Perfectly Competitive Industry, a Single-Price Monopoly