When a monopoly firm exercises market power, _________.

producer surplus increases

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consumer surplus increases

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social surplus increases

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social surplus decreases

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Solution

The correct options are
A
producer surplus increases

D
social surplus decreases

When a monopoly firm exercises market power, it causes a reallocation of rewards towards itself. As a result, producer surplus increases, consumer surplus

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Similar questions

Consumer surplus is the benefit that buyers receive from participating in a market, and producer surplus is the benefit that sellers receive.

Social surplus is maximized in case of _______.

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