A single-price monopoly is economically inefficient because, at the profit-maximizing output,
A)marginal revenue exceeds product price at all profitable levels of production.
B)monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production.
C)MC P.
D)society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce.

Question

A single-price monopoly is economically inefficient because, at the profit-maximizing output,
A)marginal revenue exceeds product price at all profitable levels of production.
B)monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production.
C)MC > P.
D)society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce.

Quizplus · Accepted Answer

A single-price monopoly is economically inefficient because it produces less than the socially optimal quantity, where marginal cost equals price (MC = P). At the profit-maximizing output, the price is higher than the marginal cost (P > MC), indicating that society values additional units more than the monopolist produces, leading to a deadweight loss.

A Single-Price Monopoly Is Economically Inefficient Because, at the Profit-Maximizing