Economic inefficiency of a monopoly is indicated by

Question

Quizplus · Accepted Answer

When a monopoly charges a price higher than the marginal cost, it generates a deadweight loss as it restricts the quantity produced and sold at a higher price. This results in inefficiency and reduces the total surplus in the market. Hence, the correct choice is C, i.e., P > MC indicated economic inefficiency of a monopoly. Options A and B are incorrect as they do not provide any information about economic inefficiency. Option D is incorrect as it represents the condition for profit maximization rather than economic efficiency.

Economic Inefficiency of a Monopoly Is Indicated by