In some situations, such as when negative externalities exist, the monopolist's price and output decisions may be preferable to that of the competitive solution.

Question

Quizplus · Accepted Answer

When negative externalities exist, competitive markets may overproduce and underprice goods, leading to inefficiency. A monopolist might produce less and charge more, which can inadvertently align closer to the socially optimal output level, reducing the negative externalities.

In Some Situations, Such as When Negative Externalities Exist, the Monopolist's