Social Sciences - What happens to consumer surplus when the government regulates monopolies?

Mahesh Godavarti (last edited 4 years ago) (Expert, Founder @Qalaxia)

Consumer surplus is a measure of the difference in market price of a good and how much higher consumers are willing to pay for that good. In a monopoly, since there are no competitors the monopoly can raise the price to what the consumers are willing to pay. When the government intervenes, and prevents monopolies, the market price drops due to competition and the consumer surplus increases. Therefore, the answer is the consumer surplus increases when the government regulates monopolies.