A _______ price charged by a monopoly than would be the case if P = MC _______ consumer surplus.
A) lower; decreases
B) higher; reduces
C) higher; increases
D) None of the above is true.

Question

Quizplus · Accepted Answer

A monopoly charges a higher price than the competitive price (P = MC). This reduces consumer surplus since consumers are forced to pay a higher price than what they would have paid in a competitive market. Therefore, option B, which states that a higher price charged by a monopoly reduces consumer surplus, is the correct answer.

A _______ Price Charged by a Monopoly Than Would Be