Asked by nikki scalera on Jun 11, 2024
Verified
Since a monopoly charges a price higher than marginal cost, it will produce an inefficient amount of output.
Marginal Cost
The additional cost incurred by producing one more unit of a good or service, critical in decision-making processes regarding output levels.
- Understand the implications of monopolies on economic efficiency and consumer surplus.
Verified Answer
KA
Katrina AttardJun 14, 2024
Final Answer :
True
Explanation :
A monopoly maximizes its profit by producing where marginal cost equals marginal revenue, which is usually at a lower level of output than what would be socially efficient. This results in a deadweight loss to society, making the monopoly inefficient.
Learning Objectives
- Understand the implications of monopolies on economic efficiency and consumer surplus.