Consumer surplus is
A)positive in the case of a monopolist practising perfect price discrimination.
B)equal to price minus marginal cost.
C)less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
D)zero for a single-price monopolist.
E)greater in a single-price monopoly than in a perfectly competitive industry.

Question

Quizplus · Accepted Answer

In a single-price monopoly, the monopolist charges a price higher than the marginal cost and produces less output, which leads to less consumer surplus compared to a perfectly competitive industry where the price equals marginal cost and consumer surplus is maximized. Therefore, choice C is the correct option. Option E is incorrect as it is the opposite of what occurs in a single-price monopoly. Option A is incorrect as perfect price discrimination eliminates consumer surplus. Option B is incorrect as it describes the relationship between price and profit, but not consumer surplus. Option D is also incorrect, as there is some consumer surplus in a single-price monopoly, but it is less than in a perfectly competitive industry.

Consumer Surplus Is