Which is a major criticism of a monopoly as a source of allocative inefficiency?
A) A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to the monopolist's opportunity cost.
B) A monopolist has no incentive to produce efficiently because even the inefficient monopolist can be assured of economic profits.
C) A monopolist will always make profits and that means that prices are too high.
D) A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms in other industries.

Question

Quizplus · Accepted Answer

A monopolist restricts output to maximize profits, leading to a situation where the price consumers are willing to pay exceeds the marginal cost of production, resulting in allocative inefficiency.

Which Is a Major Criticism of a Monopoly as a Source