If Both a Monopoly and a Competitive Market with the Same

question 116

Multiple Choice

If both a monopoly and a competitive market with the same marginal cost would produce a quantity that is greater than the social optimum in a market because of externalities,then

• A) welfare is greater under monopoly.
• B) welfare is greater under competition.
• C) welfare is the same for both market structures.
• D) the social optimum must be zero.

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Definitions:

Depreciation Expense

The portion of the cost of a fixed asset deducted as an expense over its useful life, reflecting the asset's consumption or wear and tear.

Common Stock

Shares of ownership in a corporation, granting holders voting rights and a share in the company's profits through dividends.

Long-term Debt

Debt that is not due within the next year and is often used to purchase or invest in significant assets or finance ongoing operations.