When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent
A)a transfer of benefits from the consumer to the producer.
B)a loss in total welfare.
C)the higher marginal costs incurred by the monopolists in comparison to competitive firms.
D)the higher marginal revenues gained by the monopolists in comparison to competitive firms.

Question

Quizplus · Accepted Answer

In a monopoly market, the monopolist has the power to set prices higher than the competitive market price, resulting in a transfer of benefits from the consumer to the producer. This can lead to a decrease in total welfare as consumers may choose to consume less or substitute to a lower quality product due to the higher prices. Therefore, the profits earned by the monopolist represent a transfer of benefits from the consumer to the producer.

When We Compare Economic Welfare in a Monopoly Market to a Competitive