Question

What the apple-samsung verdict means for your smartphone a california jury found samsung guilty of violating the majority of the patents in question, including software features like double-tap zooming and scrolling. it recommended that apple be awarded more than $1 billion in damages. this verdict could significantly affect both smartphone users and producers. source: cnn money, august 26, 2012. refer to fact: suppose the smartphone market becomes perfectly competitive. choose the statement that is incorrect when we compare the perfectly competitive market to a monopoly.

a) society gains.
b) total surplus increases.
c) consumers of smartphones gain.
d) producers of smartphones gain.
e) deadweight loss is eliminated.

Answer 1

Comparing a perfectly competitive market to a monopoly, society, total surplus, and consumers gain, deadweight loss is eliminated, but producers may not gain in the long run due to normal profits. The incorrect statement is that producers gain in a perfectly competitive market compared to a monopoly.

Step-by-step explanation:

In the context of the Apple-Samsung verdict and its effects on the smartphone market, it's important to understand economic structures. Suppose the smartphone market becomes perfectly competitive, when compared to a monopoly there are several outcomes. Society gains because resources are allocated more efficiently, total surplus increases as the sum of consumer and producer surplus is maximized, and consumers of smartphones gain due to lower prices and increased choices. Conversely, producers of smartphones may not necessarily gain because in a perfectly competitive market, firms earn only normal profits in the long run due to free entry and exit of firms, ensuring that prices reflect the marginal cost of production. Lastly, deadweight loss is eliminated, which signifies there are no losses of welfare in the market. Therefore, the incorrect statement when comparing a perfectly competitive market to a monopoly is 'producers of smartphones gain' as monopolies can earn abnormal profits due to lack of competition and barriers to entry.