In monopoly in long run equilibrium ?
Correct answer: B. The firm is allocatively inefficient
- A. The firm is Productively efficient
- B. The firm is allocatively inefficient
- C. The firm produces where marginal cost is less than marginal revenue
- D. The firm produces at the socially optimal level
Explanation
A monopolist maximises profit where marginal revenue equals marginal cost, but price exceeds marginal cost. Since allocative efficiency requires price to equal marginal cost, monopoly is allocatively inefficient.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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