The inefficiency associated with monopoly is due to ?
Correct answer: A. underproduction of the good
- A. underproduction of the good
- B. the monopoly's profits
- C. the monopoly's losses
- D. overproduction of the good
Explanation
A monopolist restricts output below the efficient competitive level, creating deadweight loss because some mutually beneficial units are not produced. The firm's profit itself is a transfer from consumers and is not the source of the inefficiency.
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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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