Suppose That the Perfectly Competitive Soybean Industry in the United

question 74

Multiple Choice

Suppose that the perfectly competitive soybean industry in the United States is monopolized. Under perfect competition, the equilibrium price was $2 and quantity was 100,000. The monopolist raises price to $5 and restricts quantity to 70,000. Assume that the monopolist is maximizing profits and that the monopolist faces a linear, upward-sloping marginal cost curve that begins at the origin. Also assume that this marginal cost curve is the industry supply curve under perfect competition. What is the loss in consumer surplus that the monopolist captures in the form of profit?

• A)$500,000
• B)$350,000
• C)$300,000
• D)$210,000

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Definitions:

Job Specialization

The process of focusing one's work and skill development on a specific area of expertise to increase efficiency and productivity.

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The degree to which a job has a substantial impact on the lives or work of other people, within or outside the organization.

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The state of having the self-autonomy and freedom to make decisions without undue influence from others.

Discretion

The freedom to decide what should be done in a particular situation.