When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent
A)a loss in total welfare.
B)a transfer of benefits from the buyer to the seller.
C)the higher marginal costs incurred by the monopolists in comparison to competitive firms.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

In a competitive market, profits are earned through efficient production and low costs, whereas in a monopoly market, profits are earned through restricted output and higher prices. This transfer of benefits from the buyer to the seller results in a loss of economic welfare, as consumers have to pay more for the same goods/services and the seller earns excess profits. However, it is not necessarily true that the monopolist incurs higher marginal costs than competitive firms, as this could vary depending on the industry and specific firm.

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