If a monopoly sells its good at a level that is below the socially optimal level, the price:
A)will equal the intersection of average revenue and marginal cost
B)will be inefficiently high
C)will be inefficiently low
D)may be inefficiently low or high because a monopolist is a price maker

Question

Quizplus · Accepted Answer

Monopolies often set prices higher than the competitive equilibrium price, leading to a quantity of goods sold that is below the socially optimal level. This results in inefficiency because the price exceeds the marginal cost, creating a deadweight loss in the market.

If a Monopoly Sells Its Good at a Level That