If Marginal Cost Is Constant, What Happens to a Market

question 121

Multiple Choice

If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?

• A) Consumer surplus increases, and the previously existing deadweight loss decreases.
• B) Consumer surplus increases, and the previously existing deadweight loss increases.
• C) Consumer surplus is eliminated, and an equal-sized deadweight loss is created.
• D) Consumer surplus decreases in size, and a deadweight loss is created.