Final answer:
The statement is true because in a monopoly, the single seller can restrict output and set higher prices, leading to a smaller consumer surplus compared to the larger consumer surplus in a perfectly competitive market, where prices are lower.
Step-by-step explanation:
The statement that consumer surplus is generally less in a monopoly market than in a perfectly competitive market is true. In a perfectly competitive market, goods are close substitutes for one another and market forces drive the price down to the point where it equals marginal cost, resulting in a maximum consumer surplus. Conversely, in a monopoly, the single seller has significant control over the price and output, leading to higher prices and lower consumer surplus. The lack of competition in a monopoly allows the monopolist to reduce the quantity supplied to raise prices, thus transferring what would have been consumer surplus in a competitive market to producer surplus or monopoly profit.
Consumer surplus is represented graphically as the area between the demand curve and the price level up to the quantity traded. In a monopolistic setting, this area is smaller because the price is higher and the quantity traded is lower compared to a perfectly competitive market. Due to monopolistic control, the market is less efficient, leading to a loss in combined consumer and producer surplus—part of what is known as deadweight loss.