At the profit-maximizing level of production, a perfectly competitive industry will produce an _____ level of production, and a monopolist produces an _____ level of production.
A) efficient; efficient
B) inefficient; efficient
C) inefficient; inefficient
D) efficient; inefficient

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, firms produce at the efficient level where price equals marginal cost. A monopolist, however, produces at a level where marginal cost is less than price, leading to an inefficient allocation of resources.

At the Profit-Maximizing Level of Production, a Perfectly Competitive Industry