Which of the following statements is correct? Monopolies are socially inefficient because they i) charge a price above marginal cost.
Ii) produce too little output.
Iii) earn profits at the expense of consumers.
Iv) maximize the market's total surplus.

Question

Quizplus · Accepted Answer

Monopolies are socially inefficient because they charge a price above marginal cost (i) and produce too little output (ii), leading to a deadweight loss. They do earn profits at the expense of consumers (iii), but they do not maximize the market's total surplus (iv).

Which of the Following Statements Is Correct? Monopolies Are Socially