Which of the following are the most likely characteristics of a market which has a high degree of monopoly power? Please select all that apply.
A) Prices will be high and allocative efficiency will not be evident
B) Productive efficiency will not be attained
C) The elasticity of demand for the product will be relatively inelastic
D) There will be very large profits

Question

Quizplus · Accepted Answer

A market with high monopoly power typically features high prices and lack of allocative efficiency due to the monopolist's price-setting ability. Productive efficiency is not achieved as monopolists do not produce at the lowest cost. Demand is relatively inelastic because consumers have fewer substitutes, allowing the monopolist to maintain higher prices. Large profits are common due to the ability to set prices above marginal cost.

Which of the Following Are the Most Likely Characteristics of a Market