Monopolies misallocate resources because:
A) a monopoly means less output at lower price.
B) price is equal to the marginal cost.
C) the marginal benefit of the last unit produced is equal to the marginal cost of the last unit.
D) perfect competition means more output for less price.

Question

Quizplus · Accepted Answer

In perfect competition, firms produce where price equals marginal cost, leading to more output at a lower price compared to monopolies, which restrict output to raise prices, causing resource misallocation.

Monopolies Misallocate Resources Because