The loss of economic benefits in society as a result of monopoly arises from
A. the gain in consumer surplus.
B. the loss in producer surplus.
C. the gain in producer surplus.
D. the loss in consumer surplus.
Answer: D
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The Canadian experience with inflation and unemployment in the early 1990s has this to say about policy rules:
A) A central bank independent of political pressure may thereby not be serving the public's politically-revealed preferences. B) A central bank bowing to political pressure cannot get the inflation rate below the unemployment rate. C) A constant-growth-rate-of-money rule cannot stabilize inflation if unemployment is allowed to vary substantially. D) A constant-growth-rate-of-high-powered-money rule allows too much variation in the growth of the actual money supply to hold down inflation.
Compared to perfect competition, the consumer surplus in a monopoly
A) is unchanged because price and output are the same. B) is lower because price is higher and output is lower. C) is higher because price is higher and output is the same. D) is eliminated.