A monopoly market

Question

A monopoly market

Quizplus · Accepted Answer

Monopoly markets generally fail to maximize total economic well-being because they restrict output and charge a higher price than in a perfectly competitive market. This results in a deadweight loss to society, as some consumers who would have been willing to pay a lower price for the good or service are priced out of the market. Additionally, the monopoly can potentially earn a large producer surplus at the expense of consumer surplus. Therefore, the statement that a monopoly always maximizes total economic well-being (Choice A) is false, and the statement that a monopoly always minimizes consumer surplus (Choice B) is not necessarily true, as it depends on the specific characteristics of the market. Finally, the statement that a monopoly generally fails to maximize producer surplus (Choice D) is also not necessarily true, as the monopoly may be able to charge a higher price and earn a larger producer surplus in the short run.

A Monopoly Market