Monopoly is a prime example of a market failure that leaves potential Pareto improvements unexploited.This is demonstrated by the fact that

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A monopoly is characterized by the ability to set the price higher than the marginal cost of production, leading to a deadweight loss and inefficiency in the market. This means that society is not achieving a Pareto optimal outcome where resources are allocated in a way that maximizes overall social welfare. A potential Pareto improvement would be to break up the monopoly and introduce competition, which would lead to lower prices and potentially higher output.

Monopoly Is a Prime Example of a Market Failure That