Which of the following is true?
A) Monopolies have little market power.
B) Monopolies present an efficiency problem.
C) Monopolies offer consumers more choices at lower prices.
D) Regulation is not a solution to the problems of monopoly.

Question

Quizplus · Accepted Answer

Monopolies arise when a single firm dominates a market and faces no significant competition. This lack of competition gives monopolies significant market power, allowing them to raise prices and reduce output beyond the levels that would prevail in a competitive market. This results in reduced efficiency as consumers are forced to pay more for less. Therefore, option B is true. Option A is incorrect as monopolies have significant market power. Option C is also incorrect as monopolies offer consumers fewer choices and higher prices. Option D is incorrect as regulation is a common solution to the problems of monopoly, such as antitrust laws that prevent firms from engaging in anti-competitive behavior.

Which of the Following Is True