The gains to monopolists from exercising market power
A)exceed the losses to consumers in monopoly markets, resulting in a net gain to society.
B)equal the losses to consumers in monopoly markets, resulting in no net change for society.
C)are less than the losses to consumers in monopoly markets, resulting in a net loss to society.
D)create smaller deadweight losses than occur in purely competitive industries.

Question

Quizplus · Accepted Answer

Monopolists gain by charging higher prices, but this results in a net loss to society because the losses to consumers (through higher prices and reduced quantity) exceed the gains to the monopolist. This creates a deadweight loss, reflecting inefficiency and a reduction in total welfare.

The Gains to Monopolists from Exercising Market Power