How Does a Competitive Market Compare to a Monopoly That

question 32

Multiple Choice

How does a competitive market compare to a monopoly that engages in perfect price discrimination?

• A)In both cases, total social welfare is the same.
• B)Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly.
• C)In both cases, some potentially mutually beneficial trades do not occur.
• D)Consumer surplus is the same in both cases.

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Definitions:

Social Regulation

Rules and standards imposed by governments to protect public health, safety, and welfare, including environmental and workplace regulations.

Critics

Individuals or groups who express judgments or evaluations, often negative, about various subjects, including art, literature, policies, or societal norms.

Government

An organized group or system responsible for governing a structured community, typically a country.

Efficiency Loss

The decrease in economic efficiency that occurs when a market outcome does not allocate resources in the most economically beneficial way, often due to externalities or market failures.