Why is a monopoly considered to be an inefficient market?
A)In a monopoly market,consumers gain surplus at the cost of the producer.
B)A monopoly firm produces at the level where price is equal to marginal cost.
C)A monopoly market is characterized by a deadweight loss.
D)A monopoly firm profitably increases prices irrespective of demand.

Question

Quizplus · Accepted Answer

In a monopoly market, the single firm has the power to set prices and restrict output, leading to prices higher than what would be achieved in a competitive market. This results in a deadweight loss, where there is an inefficient allocation of resources and reduced overall welfare. Consumers lose out on surplus while the producer enjoys excess profits. Therefore, a monopoly is considered to be an inefficient market.

Why Is a Monopoly Considered to Be an Inefficient Market