If a Perfectly Competitive Industry Becomes a Monopoly and the Costs

question 128

Multiple Choice

If a perfectly competitive industry becomes a monopoly and the costs do not change, which of the following allocation of costs and benefits applies?

• A) The producer and society are harmed, but consumers benefit.
• B) The producer is harmed, but consumers and society benefit.
• C) The producer and society benefit, but consumers are harmed.
• D) The producer, consumers and society all benefit.
• E) The producer benefits, but consumers and society are harmed.

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Definitions:

Innovative Product

A new or significantly improved product, service, or technology that meets a new requirement or serves a new market, often resulting in enhanced efficiency, convenience, or performance.

Initial Price

The starting price set for a product or service when it is first introduced to the market.

Publishers' Retail List Price

The price suggested by publishers that retailers should charge for their books.

Distributors

Intermediaries that buy products from manufacturers or wholesalers and sell them to retailers or directly to consumers.