Which of the following is an argument in favor of a competitive market structure rather than monopoly?
A)Monopolies have greater ability to pursue research and design.
B)The lure of monopoly power provides a greater incentive for invention and innovation.
C)Monopolies produce less goods at a higher price than competitive markets,ceteris paribus.
D)Economies of scale allow a single firm to produce at lower cost than in a competitive market,ceteris paribus.

Question

Quizplus · Accepted Answer

Monopolies produce less goods at a higher price than competitive markets, ceteris paribus. This means that in a competitive market structure, firms are forced to produce more goods at a lower price in order to distinguish themselves and gain market share. This leads to greater efficiency and consumer surplus in the market.

Which of the Following Is an Argument in Favor of a Competitive