Whenever a firm can charge a price greater than marginal cost,
A)the firm must be a monopolist.
B)there is some loss of economic efficiency.
C)consumers have the ability to choose a close substitute.
D)the firm will earn economic profits.

Question

Quizplus · Accepted Answer

Whenever a firm can charge a price greater than marginal cost, there is some loss of economic efficiency. This is because the firm is producing less output than it would if it were charging a price equal to marginal cost. As a result, consumers are paying a higher price for the good or service than they would if the firm were charging a price equal to marginal cost.

Whenever a Firm Can Charge a Price Greater Than Marginal