Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _____ to increase and _____ to decrease after the breakup.
A) producer surplus; consumer surplus and total surplus
B) consumer surplus; producer surplus and total surplus
C) consumer surplus and total surplus; producer surplus
D) producer surplus and total surplus; consumer surplus

Question

Quizplus · Accepted Answer

In a perfectly competitive market, consumer surplus and total surplus typically increase due to more efficient allocation of resources and lower prices, while producer surplus decreases as firms no longer have monopoly pricing power.

Suppose the GoSports Pennant Monopoly Is Broken Up and the Pennant