A monopoly results in productive inefficiency because at the profit-maximizing output level,
A)P MC.
B)ATC is not at its minimum level.
C)MC is not at its minimum level.
D)P AVC.

Question

A monopoly results in productive inefficiency because at the profit-maximizing output level,
A)P > MC.
B)ATC is not at its minimum level.
C)MC is not at its minimum level.
D)P > AVC.

Quizplus · Accepted Answer

In a monopoly, productive inefficiency occurs because the average total cost (ATC) is not minimized at the profit-maximizing output level, meaning resources are not being used in the most cost-effective way.

A Monopoly Results in Productive Inefficiency Because at the Profit-Maximizing