When consumers are not identical, a market failure may occur when
A)a monopoly producer provides compatibility.
B)a monopoly producer does not provide compatibility and compatibility is not socially preferred.
C)a monopoly provides compatibility and compatibility is socially preferred.
D)a monopoly producer does not provide compatibility but compatibility is socially preferred to incompatibility.

Question

Quizplus · Accepted Answer

When a monopoly producer does not provide compatibility in a situation where compatibility is socially preferred, it can lead to market failure. This is because the monopoly's decision prevents the market from reaching an efficient outcome that maximizes welfare by not allowing products or services to work together seamlessly.

When Consumers Are Not Identical, a Market Failure May Occur