The Principal Difference Between Economic Profits for a Monopolist and for a Competitive

question 24

Multiple Choice

The principal difference between economic profits for a monopolist and for a competitive firm is that

• A)monopoly profits create major problems of equity whereas competitive profits do not.
• B)competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.
• C)monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not.monopoly profits are considered a deadweight loss but competitive profits are not.
• D)monopoly profits are considered a deadweight loss but competitive profits are not.

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Definitions:

Agent

An individual or entity authorized to act on behalf of another (the principal) in dealings with third parties.

Undisclosed Principal

A party in a contract whose identity is not revealed to the other party.

Agent Liability

The legal principle that holds agents accountable for their actions, especially when such actions cause harm or breach contractual obligations.

Contract

A legally binding agreement between two or more parties that is enforceable by law.