Under monopoly, resources are allocated as efficiently as in perfect competition.

Question

Quizplus · Accepted Answer

Under monopoly, resources are allocated inefficiently due to lack of competition and market power of the monopolist. The monopolist has the ability to restrict output and charge higher prices, resulting in a deadweight loss to society. In perfect competition, resources are allocated efficiently as firms have no market power and operate at the lowest possible cost.

Under Monopoly, Resources Are Allocated as Efficiently as in Perfect