Asked by Eribel Almonte on May 16, 2024
Verified
The higher prices charged by monopolists:
A) are like a private tax that redistributes income from consumers to monopoly sellers.
B) are socially optimal because they better reflect how much society values the good relative to the resources used to produce it.
C) return to consumers through the public goods provided by monopolies.
D) have no effect on the distribution of income.
Higher Prices
An increase in the cost that consumers must pay to purchase goods or services.
Income Redistribution
The transfer of income from certain individuals or groups to others through mechanisms like taxes, welfare programs, and subsidies, aimed at reducing economic inequality.
- Comprehend the idea of market dominance and its impacts on the well-being of society.
Verified Answer
EK
Engr. KironMay 19, 2024
Final Answer :
A
Explanation :
Monopolies have the power to charge higher prices due to their control over the market, which can be viewed as a private tax on consumers. As a result, income is redistributed from consumers to monopoly sellers. This leads to a decreased consumer surplus and a potential increase in producer surplus for the monopolist. Therefore, choice A is the best answer.
Learning Objectives
- Comprehend the idea of market dominance and its impacts on the well-being of society.