In a monopolized market producer surplus is lower than in a

In a monopolized market:

- producer surplus is lower than in a competitive market, while consumer surplus is higher.

- consumer surplus is higher than in a competitive market, while total surplus is lower.

- producer surplus is higher than in a competitive market, while consumer surplus is lower.

- total surplus is higher than in a competitive market, while consumer surplus is lower.

Solution

A monopolist charges higher price and produces lower quantity relative to the perfectly competitive market.

This charging of higher price and production of lower quantity results in producer surplus being higher for the monopolist relative to competitive market while consumer surplus is lower in case of monopoly relative to competitive market.

Thus, in monopolized market, producer surplus is higher than in a competitive market, while consumer surplus is lower.

Hence, the correct answer is the option (3).