A monopoly:
A) allocates resources in a socially optimal way.
B) produces less than it would if it adhered to the MC = P standard.
C) adheres to the MC = P standard.
D) encourages greater efficiency.

Question

Quizplus · Accepted Answer

Monopoly firms produce less than what would be produced at the MC = P equilibrium. This is because monopolies have market power and can charge a higher price than the marginal cost. Therefore, they produce less to keep the price high, leading to a deadweight loss and inefficiency.

A Monopoly