Because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output.

Question

Quizplus · Accepted Answer

Pure monopolists typically underallocate resources to their industry by producing less than the socially optimal output level, where price (P) equals marginal cost (MC), leading to a lower quantity of output and higher prices than in competitive markets.

Because of Their Large-Scale Level of Production, Pure Monopolists Overallocate