Market Diagram The Following Questions Refer to the Accompanying Market Diagram. PC

question 21

Multiple Choice

Market Diagram

The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.

-Refer to the market diagram.Relative to the surplus they would receive in a competitive market,consumers lose how much surplus because there is a monopoly?

• A) Area F + G + H
• B) Area C + D + E
• C) Area E + H
• D) Area A + B

---

Definitions:

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences in a way that maximizes utility.

External Benefits

Advantages that result from a product or service's use that affect someone other than the direct consumer or producer, often justifying government intervention.

Consumption

The process by which goods and services are used by households and individuals, leading to a decrease in their availability.

Negative Externalities

Negative effects or costs that are incurred by third parties as a result of economic activities, for which they are not compensated, such as pollution.