A single-price monopoly transfers
A) consumer surplus to producers.
B) producer surplus to consumers.
C) economic profit to consumers.
D) economic profit to the government.
E) economic profit to deadweight loss.

Question

Quizplus · Accepted Answer

In a single-price monopoly, the firm can control the price and quantity of the product, resulting in a higher price than in a competitive market. This leads to a decrease in consumer surplus (the difference between what consumers are willing to pay and what they actually pay) while increasing producer surplus (the difference between the actual price and the cost of production). Hence, a single-price monopoly transfers consumer surplus to producers.

A Single-Price Monopoly Transfers