The Consumer Surplus Lost Because Monopolists Restrict the Production of Output

question 26

Multiple Choice

The consumer surplus lost because monopolists restrict the production of output represents a welfare loss because:

• A) it is transferred to producers in the form of profit.
• B) consumers pay a higher price than they would in a more competitive market.
• C) society is not using its scarce resources in the best way possible.
• D) of both a. and b., but not c.

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Definitions:

APS

The Average Propensity to Save, which is the fraction of total income that households save rather than spend on consumption.

APC

Stands for Average Propensity to Consume, which is the fraction of income that households spend on consumption rather than saving.

APS

Automatic Payment System, a system allowing for automatic transfers of payments, often in financial contexts; the term can refer to multiple concepts depending on the context.

Savings

Money that is set aside from one's income or earnings for future use, often accumulating interest.