Which of the following statements is TRUE?
A) Monopolies are always inefficient since they create higher prices for consumers.
B) Monopolies create incentives for additional research and development.
C) Monopolies decrease consumer surplus but increase total surplus in an economy.
D) Consumers typically lose less than producers gain in monopoly markets.

Question

Quizplus · Accepted Answer

Monopolies have a higher incentive to invest in research and development since they do not face competition, which allows them to capture a larger share of the market. This increased investment can lead to innovation and technological progress. A is not always true since monopolies can achieve efficiency through economies of scale, and B is not true since monopolies can also reduce total surplus by charging higher prices and reducing output. D is not necessarily true since the distribution of the benefits and costs of a monopoly depends on the specific market conditions.

Which of the Following Statements Is TRUE