In the absence of externalities, a monopoly will charge a price above the level where MSC = MSB and produce an output below the level where MSC = MSB.

Question

Quizplus · Accepted Answer

In the absence of externalities, a monopoly will indeed charge a price above the level where Marginal Social Cost (MSC) equals Marginal Social Benefit (MSB) and produce an output below that level, leading to a loss of allocative efficiency compared to a perfectly competitive market.

In the Absence of Externalities, a Monopoly Will Charge a Price