Asked by brent ashley on Jul 08, 2024
Verified
Which statement is TRUE?
A) Monopolies produce too much and charge too much from the standpoint of efficiency.
B) Monopolies usually are economically efficient because they have economic profits with which to work.
C) Monopolies produce too little and charge too much from the standpoint of efficiency.
D) Monopolies cause an efficiency problem but are not associated with a deadweight loss.
Deadweight Loss
A decrease in economic efficiency resulting from the failure to reach equilibrium in the market for a good or service.
Monopolies
Market structures characterized by a single seller who controls the market supply of a good or service and can influence the price.
Efficiency
The optimal allocation of resources to maximize desired outputs without wasting any input.
- Investigate the influence of monopoly power on the outcomes within markets, focusing on price levels and output quantities.
- Recognize situations in which monopolies cause deadweight loss and comprehend the effects on efficiency.
Verified Answer
OP
Oscar PanteJul 14, 2024
Final Answer :
C
Explanation :
Monopolies have the ability to restrict output and raise prices, which leads to a lower quantity produced and higher prices than in a competitive market. This results in a market inefficiency, as the optimal level of output and price is not achieved. Therefore, statement C is true as monopolies produce too little and charge too much from the standpoint of efficiency.
Learning Objectives
- Investigate the influence of monopoly power on the outcomes within markets, focusing on price levels and output quantities.
- Recognize situations in which monopolies cause deadweight loss and comprehend the effects on efficiency.