Monopoly power can create distortions because a powerful seller can raise price and profits by restricting output.

Name: Monopoly power can create distortions because a powerful seller can raise price and profits by restricting output.
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Question

Quizplus · Accepted Answer

When a seller has monopoly power, they can restrict output and raise prices without fear of competition. This can lead to higher profits for the seller but can create distortions in the market, such as reduced consumer surplus and deadweight loss.

Monopoly Power Can Create Distortions Because a Powerful Seller Can