A monopoly generates inefficiency because:
A)the high prices cause some people to choose to go without the good
B)the monopoly owner earns an abnormally large profit
C)the monopoly pays its workers very low wages
D)of all of the above

Question

Quizplus · Accepted Answer

A monopoly generates inefficiency because it can charge high prices due to the lack of competition, which can cause some people to choose to go without the good. This results in a deadweight loss, as some potential consumers are priced out of the market, decreasing overall welfare. Options B and C may or may not be true, but they do not directly relate to the inefficiency generated by a monopoly.

A Monopoly Generates Inefficiency Because