A single-price monopoly is economically inefficient because, at the profit-maximizing output,
A) marginal revenue exceeds product price at all profitable levels of production.
B) monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production.
C) MC P.
D) society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce.

Question

A single-price monopoly is economically inefficient because, at the profit-maximizing output,
A) marginal revenue exceeds product price at all profitable levels of production.
B) monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production.
C) MC > P.
D) society values additional units of the monopolized product more highly than it does the alternative products those resources could otherwise produce.

Quizplus · Accepted Answer

A single-price monopoly is inefficient because it produces less than the socially optimal output level, where marginal cost equals marginal benefit (price). Society values additional units more than the cost of producing them, indicating underproduction.

A Single-Price Monopoly Is Economically Inefficient Because, at the Profit-Maximizing