Question

Which of the following orders accurately represents the way consumers feel about types of markets?

A)Perfect Competition > Monopoly > Cournot

B)Monopoly > Bertrand > Cartel

C)Monopoly > Cournot > Perfect Competition

D)Bertrand > Stackelberg > Cartel

Answer 1

Consumer prefers the market structure which generates the more consumer surplus. So from consumers point of view, Perfect Competition > Monopoly > Cournot is the best order for them. As in a perfect competition, there are many sellers in the market with a homogeneous product so no seller charge a higher price, the affordable prices has been charged by them and it leads to maximize the consumer surplus. In a monopoly market the quantity is less than the competitive market and the monopolist price is greater than the competitive market price. Therfore, the consumer surplus is little less in this market. But in the cournot model, is an economic model in which competing firms choose a quantity to produce independently and simultaneously, sometimes the sellers independent decision making leads to the higher prices in the market and the consumer surplus falls.

Option A is correct.