The above figure shows a market.
-The figure above shows that monopoly is ________ because it produces a level of output at which ________.
A) inefficient; marginal benefit equals marginal cost
B) efficient; marginal benefit equals marginal cost
C) efficient; marginal benefit exceeds marginal cost
D) inefficient; marginal benefit exceeds marginal cost
E) efficient; producer surplus is maximized

Question

The above figure shows a market.
-The figure above shows that monopoly is ________ because it produces a level of output at which ________.
A) inefficient; marginal benefit equals marginal cost 
B) efficient; marginal benefit equals marginal cost 
C) efficient; marginal benefit exceeds marginal cost 
D) inefficient; marginal benefit exceeds marginal cost 
E) efficient; producer surplus is maximized

Quizplus · Accepted Answer

In a monopoly, the level of output is typically at a point where marginal benefit exceeds marginal cost, leading to inefficiency. This is because monopolies restrict output to raise prices above marginal costs, which results in a loss of allocative efficiency.

The Above Figure Shows a Market