Which of the following statements is TRUE?
A) At the monopolist's equilibrium, resources are being efficiently allocated.
B) With a monopoly, the value to society of the last unit produced is less than it's production cost.
C) Monopolists raise the price and restrict production, compared to a competitive situation.
D) A monopolist always produces a higher level of output than would be produced if the market were competitive.

Question

Quizplus · Accepted Answer

Monopolists have the market power to raise prices and restrict production compared to a competitive situation, leading to a less efficient allocation of resources. Option A is false because monopolies do not always allocate resources efficiently. Option B is also false because the value to society of the last unit produced may still be higher than its production cost, but the monopoly price is set higher than the competitive price, leading to allocative inefficiency. Option D is false because a monopolist may not necessarily produce a higher level of output than in a competitive market.

Which of the Following Statements Is TRUE