Compared to the output in a competitive market, monopoly pricing has the consequence of the market output being:
A)greater than the social optimum
B)equal to the social optimum
C)less than the social optimum
D)all of the above are possible

Question

Quizplus · Accepted Answer

Monopoly pricing results in less market output than the social optimum because the monopolist restricts output to increase prices and profits. This leads to a deadweight loss where the social value of additional units of output exceeds the private cost of producing them. Therefore, the monopoly price and quantity are not efficient from a societal standpoint.

Compared to the Output in a Competitive Market, Monopoly Pricing