Which of the following statements about a monopolist is TRUE?
A) Monopolies tend to misallocate resources.
B) All monopolies are unlawful in the United States.
C) Monopolies tend to supply goods at lower prices than those charged by firms in perfect competition.
D) Monopolies will always make a profit in the long run.

Question

Quizplus · Accepted Answer

Monopolies tend to misallocate resources because they are not subject to the market forces of competition that would otherwise incentivize them to produce goods efficiently and at the lowest possible cost. Without competition, monopolies have less pressure to innovate or improve their products, and they may also charge higher prices than they would if they faced competition.

Which of the Following Statements About a Monopolist Is TRUE