Compared to perfect competition, the consumer surplus in a monopoly
A)is unchanged because price and output are the same.
B)is lower because price is higher and output is lower.
C)is higher because price is higher and output is the same.
D)is eliminated.

Question

Quizplus · Accepted Answer

In a monopoly, the producer has control over the price and limits the quantity produced to maximize their profits. This results in a higher price and a lower output compared to perfect competition. As a result, consumers have to pay a higher price, resulting in a lower consumer surplus.

Compared to Perfect Competition, the Consumer Surplus in a Monopoly