Consumer surplus is smaller if an industry is operated by a monopolistic firm than it is if an industry is operated by competitive firms.

Question

Quizplus · Accepted Answer

This is because monopolistic firms charge higher prices and produce less output compared to competitive firms, resulting in consumers having to pay more for the same quantity of goods or services. Thus, their surplus is smaller under a monopoly.

Consumer Surplus Is Smaller If an Industry Is Operated by a Monopolistic