A monopoly inefficiently allocates resources by producing a smaller quantity at a higher price than if perfectly competitive firms characterized the same industry.

Question

Quizplus · Accepted Answer

Monopolies have market power, allowing them to set prices higher than what would occur under perfect competition. Additionally, they often produce less output than would occur under perfect competition, resulting in an inefficient allocation of resources.

A Monopoly Inefficiently Allocates Resources by Producing a Smaller Quantity