Question

Compared to a perfectly competitive industry, a single-price monopoly with the same costswill__________.A) create a deadweight loss. B) create less economic profit.C) create less consumer surplus. D) Both answers A and C are correct.

Answer 1

Answer:

The correct answer is D

Explanation:

Perfectly competition market or industry is the one in which it occurs when there exists many sellers, easy entry as well as exiting of firms, products are identical and sellers are the price takers.

Whereas in the single price monopoly, is the one where there is single firm selling the product at their own price, they are price maker. And comparing both at same cost will result in creating less customers surplus as well as create deadweight loss, which result in economic efficiency in relation to utility for producers.