A monopoly in a general equilibrium model is considered inefficient because:
A)the conditions for efficiency in consumption are violated.
B)the monopolist earns positive profit.
C)the economy's product- mix is inefficient.
D)the conditions for efficiency in production are violated.

Question

Quizplus · Accepted Answer

A monopoly leads to an inefficient product mix because it restricts output to maximize profits, resulting in a deadweight loss and a deviation from the optimal allocation of resources.

A Monopoly in a General Equilibrium Model Is Considered Inefficient