From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to
A) an output of the product that exceeds the amount consistent with ideal economic efficiency.
B) an output of the product that is less than the amount consistent with ideal economic efficiency.
C) an output of the product that equals the amount consistent with ideal economic efficiency.
D) product prices that are below the cost of production.

Question

Quizplus · Accepted Answer

When competitive forces are weak, firms may have market power, leading to reduced output and higher prices, which is less than the amount consistent with ideal economic efficiency.

From the Viewpoint of Economic Efficiency, When Competitive Forces in an Industry