Schumpeter's hypothesis states that
A) monopolists are always trying to raise prices
B) competition does not always generate the lowest prices
C) when government fosters competition, prices fall
D) price-takers create the highest prices
E) efficiency is highest under conditions of perfect competition

Question

Quizplus · Accepted Answer

Schumpeter's hypothesis suggests that competition does not always lead to the lowest prices because large firms or monopolies can exploit economies of scale and invest in innovation, potentially leading to lower costs and prices in the long run.

Schumpeter's Hypothesis States That