A feature of monopoly that leads to unfavorable consequences is that it:
A) reduces income inequality.
B) sets marginal cost equal to price.
C) produces more output than if perfectly competitive firms characterized the same industry.
D) charges a higher price than if perfectly competitive firms characterized the same industry.

Question

Quizplus · Accepted Answer

Monopoly power allows a firm to charge a higher price than would be charged in a perfectly competitive market. This leads to a reduction in consumer surplus and an increase in producer surplus, which can result in a misallocation of resources and a reduction in overall economic welfare. In addition, the lack of competition can lead to reduced incentives for innovation and efficiency, which can further harm the economy in the long run.

A Feature of Monopoly That Leads to Unfavorable Consequences Is