The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4
D 1 : Demand curve of group 1
D 2 : Demand curve of group 2
MR 1 : Marginal revenue of group 1
MR 2 : Marginal revenue of group 2
MC: Marginal cost
-The long-run equilibrium price-output combination for a monopolist is economically inefficient because:
A)it does not operate on the minimum point of its marginal-cost curve.
B)it does not produce the level of output at which price equals marginal cost.
C)consumer surplus is maximized but not producer surplus.
D)producer surplus is maximized but not consumer surplus.
E)it operates on the downward sloping portion of the average-total-cost curve.

Question

The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4
  D 1 : Demand curve of group 1
D 2 : Demand curve of group 2
MR 1 : Marginal revenue of group 1
MR 2 : Marginal revenue of group 2
MC: Marginal cost
-The long-run equilibrium price-output combination for a monopolist is economically inefficient because:
A)it does not operate on the minimum point of its marginal-cost curve. 
B)it does not produce the level of output at which price equals marginal cost. 
C)consumer surplus is maximized but not producer surplus. 
D)producer surplus is maximized but not consumer surplus. 
E)it operates on the downward sloping portion of the average-total-cost curve.

Quizplus · Accepted Answer

In the long-run equilibrium, a monopolist charges a price higher than its marginal cost and produces a quantity lower than the socially efficient level. Hence, it does not produce the level of output at which price equals marginal cost, which is socially efficient. This leads to a deadweight loss, which implies that some potential consumer surplus is lost, and the total surplus of society is smaller than it could be. Therefore, choice B is the correct answer. Choices A, C, D, and E do not represent the reason for the inefficiency of the monopolist's long-run equilibrium.

The Figure Given Below Shows the Demand Curves of Two