The inefficiency associated with monopoly is due to
A) the monopoly's profits.
B) underproduction of the good.
C) the monopoly's losses.
D) overproduction of the good.

Question

Quizplus · Accepted Answer

Monopolies have market power, meaning they can set prices higher than the marginal cost of production. This results in a deadweight loss to society as fewer units of the good are produced and consumed than would occur under perfect competition. Therefore, the inefficiency associated with monopoly is due to the underproduction of the good.

The Inefficiency Associated with Monopoly Is Due to