When Comparing Perfect Competition to a Single-Price Monopoly with the Same

question 492

Multiple Choice

When comparing perfect competition to a single-price monopoly with the same costs

• A) both market types use resources efficiently.
• B) there is a deadweight loss associated with a monopoly.
• C) the sum of producer and consumer surplus is maximized under a monopoly.
• D) the sum of producer and consumer surplus is minimized under perfect competition.

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Definitions:

Market Price

The current value at which an asset or service can be bought or sold in a competitive marketplace.

Zero Economic Profit

A situation where a firm's total revenue is exactly equal to its total costs, including opportunity costs.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Market Price

The price at which goods are bought and sold in a competitive marketplace, constantly influenced by supply and demand.