The profit-maximizing output of a pure monopoly is not socially optimal, because in equilibrium
A)price equals minimum average total cost.
B)marginal revenue equals marginal cost.
C)marginal cost exceeds price.
D)price exceeds marginal cost.

Question

Quizplus · Accepted Answer

In a pure monopoly, the profit-maximizing output level occurs where marginal revenue equals marginal cost, but the price charged to consumers is higher than the marginal cost, leading to a deadweight loss and making it not socially optimal.

The Profit-Maximizing Output of a Pure Monopoly Is Not Socially