The price charged by the monopolist is A)optimal and socially efficient because of the output. B)optimal but socially inefficient because MR MR. D)not optimal but socially efficient because of the decrease in producer surplus.

Question

The price charged by the monopolist is
A)optimal and socially efficient because of the output.
B)optimal but socially inefficient because MR < P.
C)not optimal nor socially efficient because MC>MR.
D)not optimal but socially efficient because of the decrease in producer surplus.

Quizplus · Accepted Answer

Monopolists set prices where marginal revenue (MR) is equal to marginal cost (MC), but the price (P) charged to consumers is higher than the MR, leading to a socially inefficient outcome because the price does not reflect the true cost of production, resulting in a deadweight loss.

The Price Charged by the Monopolist Is