Under normal monopoly, P MC, and so the marginal benefit to society of increasing output exceeds the marginal cost. This means that an increase in output will increase welfare.

Question

Under normal monopoly, P > MC, and so the marginal benefit to society of increasing output exceeds the marginal cost. This means that an increase in output will increase welfare.

Quizplus · Accepted Answer

In a monopoly, the price (P) is set above the marginal cost (MC), indicating that the value to consumers of an additional unit (marginal benefit) is greater than the cost of producing it, thus increasing output can enhance societal welfare.

Under Normal Monopoly, P > MC, and So the Marginal