The Following Figure Shows the Market Demand Curve for Penicillin

question 128

Multiple Choice

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure.

-Refer to the figure above.After the market changes from perfect competition to a monopoly,________.

• A) social surplus decreases
• B) the market price decreases
• C) deadweight loss decreases
• D) consumer surplus increases

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Definitions:

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