A monopolist's pricing and output behaviour
A) increases both consumer and producer surplus.
B) reduces both consumer and producer surplus.
C) increases the sum of consumer and producer surplus.
D) reduces producer surplus and increases consumer surplus.
E) reduces the sum of consumer and producer surplus.

Question

Quizplus · Accepted Answer

A monopolist reduces the sum of consumer and producer surplus because it restricts output to raise prices, leading to a deadweight loss in the market.

A Monopolist's Pricing and Output Behaviour