Final answer:
Converting a perfectly competitive industry into a monopoly leads to a decrease in the quantity of output and an increase in total industry profits. However, the market supply curve in perfect competition does not transition to the monopolist's marginal cost curve.
Step-by-step explanation:
When a perfectly competitive industry is turned into a monopoly, several changes occur that affect market dynamics differently. Firstly, the quantity of output produced typically falls in a monopoly compared to a perfectly competitive industry because the monopolist maximizes profit where marginal revenue equals marginal cost, which is usually at a lower output level than in a perfectly competitive market where firms produce where price equals marginal cost.
Secondly, total profits in the industry generally rise when a monopoly is formed. This is because a monopolist can set prices above marginal cost to maximize profits, which is not possible in perfect competition due to the existence of many competitors and no barriers to entry.
Lastly, it is incorrect to say that the perfectly competitive industry’s market supply curve becomes the monopolist’s marginal cost curve. The monopolist’s marginal cost curve is part of its supply decision-making process, but it does not serve as the market supply curve since the monopolist is the sole producer and faces the market demand curve directly.