The figure below shows the market equilibrium (point B)at the intersection of demand and supply curves under perfect competition. Figure 10.5 D: Market demand curve
S: Market supply curve
Assume that in Figure 10.5, the market is originally perfectly competitive but then becomes a monopoly.Compared with perfect competition, a monopoly would have:

Question

The figure below shows the market equilibrium (point B)at the intersection of demand and supply curves under perfect competition. Figure 10.5  D: Market demand curve
S: Market supply curve
Assume that in Figure 10.5, the market is originally perfectly competitive but then becomes a monopoly.Compared with perfect competition, a monopoly would have:

Quizplus · Accepted Answer

Compared to perfect competition, a monopoly will have a higher price (Pm), a lower quantity (Qm) and will lead to a deadweight loss. This is because the monopoly will restrict output and charge a higher price than what would prevail under perfect competition, reducing consumer surplus and generating a deadweight loss. Additionally, the producer surplus in the monopoly market will be higher than under perfect competition, but this does not offset the welfare loss to consumers and society as a whole.

The Figure Below Shows the Market Equilibrium (Point B)at the Intersection