Why is the monopoly total welfare lower than the competitive total welfare?
What will be an ideal response?
A monopoly restricts output relative to the competitive level. This generates a deadweight loss. Consumers value the units the monopolist does not produce more than the cost of producing those units. Thus, total welfare is lower with a monopolist.
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One disadvantage of international policy coordination is caused by
A) having to trust another country. B) internalizing international policy externalities. C) monetary unity. D) forced intervention in money markets.
A justification for patents is that without patents consumer surplus would be
A) larger than with the patent. B) zero since the product would not be invented. C) only slightly smaller than with the patent. D) zero since the monopoly would be a revenue maximizer.
Refer to the payoff matrix below. If Cruise the World uses a mixed strategy, what probability for offering Specials should the firm use to equate Cruise R Us' expected profits from offering a Special or not offering a special (No Special)?
Cruise R Us and Cruise the World compete in the cruise line industry. Each firm needs to determine if they are going to offer special cruise packages with special rates or not offer the specials. The above payoff matrix shows the firms' net economic profit for each set of strategies.
A) 0.75 B) 0.375 C) 0.33 D) 0.625
In the balance of payments, a deficit item is any transaction
A) that leads to a receipt by a resident of a country or its government. B) that leads to a payment by a resident of a country or its government. C) that is an export of a good or service. D) that makes residents of a country worse off.