Monopolies are inefficient because they i) eliminate barriers to entry.
Ii) price their product at a level where marginal revenue exceeds marginal cost.
Iii) restrict output below the socially efficient level of production.

Question

Quizplus · Accepted Answer

Monopolies are inefficient because they restrict output below the socially efficient level of production, leading to higher prices and reduced consumer surplus. They do not eliminate barriers to entry, and they price their product where marginal revenue equals marginal cost, not where marginal revenue exceeds marginal cost.

Monopolies Are Inefficient Because They I) Eliminate Barriers to Entry