At its profit-maximizing output, a pure nondiscriminating monopolist achieves
A)neither productive efficiency nor allocative efficiency.
B)both productive efficiency and allocative efficiency.
C)productive efficiency but not allocative efficiency.
D)allocative efficiency but not productive efficiency.

Question

Quizplus · Accepted Answer

A pure nondiscriminating monopolist does not achieve either productive efficiency (producing goods at the lowest possible cost) or allocative efficiency (producing the right mix of goods as determined by consumer preferences) at its profit-maximizing output. This is because it restricts output to raise prices above marginal costs, leading to a deadweight loss in the economy.

At Its Profit-Maximizing Output, a Pure Nondiscriminating Monopolist Achieves