If the market for diamonds is a monopoly, then
A) there is an inefficient amount of resources allocated to the diamond market.
B) the prices of diamonds are too low.
C) diamond production is at the amount where the marginal social benefit equals the marginal social cost.
D) the diamond market is efficient.

Question

Quizplus · Accepted Answer

In a monopoly, the monopolist restricts output to raise prices, leading to an inefficient allocation of resources compared to a competitive market.

If the Market for Diamonds Is a Monopoly, Then