Which statement is TRUE?
A)Monopolies produce too much and charge too much from the standpoint of efficiency.
B)Monopolies usually are economically efficient because they have economic profits with which to work.
C)Monopolies produce too little and charge too much from the standpoint of efficiency.
D)Monopolies cause an efficiency problem but are not associated with a deadweight loss.

Question

Quizplus · Accepted Answer

Monopolies have the ability to restrict output and raise prices, which leads to a lower quantity produced and higher prices than in a competitive market. This results in a market inefficiency, as the optimal level of output and price is not achieved. Therefore, statement C is true as monopolies produce too little and charge too much from the standpoint of efficiency.

Which Statement Is TRUE