Since a monopoly charges a price higher than marginal cost, it will produce an inefficient amount of output.

Name: Since a monopoly charges a price higher than marginal cost, it will produce an inefficient amount of output.
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Question

Quizplus · Accepted Answer

A monopoly maximizes its profit by producing where marginal cost equals marginal revenue, which is usually at a lower level of output than what would be socially efficient. This results in a deadweight loss to society, making the monopoly inefficient.

Since a Monopoly Charges a Price Higher Than Marginal Cost