Under monopoly we have "unexploited gains from trade" because:
A) if the firm were competitive it would have increased output in the long run
B) if the firm were competitive it would have decreased output in the long run
C) if the firm were competitive it would have not changed output in the long run
D) FCC is always trying to regulate it

Question

Quizplus · Accepted Answer

Monopoly restricts output and charges a higher price than in a competitive market, resulting in unexploited gains from trade. In a competitive market, the price would be lower, and there would be a higher quantity produced, resulting in an increase in consumer and producer surplus. As a result, monopolies are inefficient since they restrict output to earn profits, resulting in lost social welfare. Therefore, if the firm were competitive, it would increase output in the long run and lead to more gains from trade.

Under Monopoly We Have "Unexploited Gains from Trade" Because