Which of the following statements is a major criticism of a pure monopoly as a source of allocative inefficiency?
A. A pure monopoly fails to expand output to the level where the price of an additional unit is just equal to its marginal cost.
B. A pure monopoly will always generate economic profit, and that means that prices are too high.
C. A pure monopoly has an unfair advantage because it can purchase labor at a lower price than perfectly competitive firms can.
D. A pure monopoly has no incentive to produce efficiently, because even the inefficient pure monopoly can be assured of economic profits.
Answer: A
You might also like to view...
According to the graph, what is the reduction in U.S. lumber consumption as a result of the tariff?
a. 700,000 board feet
b. 100,000 board feet
c. 200,000 board feet
d. 300,000 board feet
An adverse supply shock generally decreases the price level and the real GDP
a. True b. False Indicate whether the statement is true or false
The Fed can change the money supply by changing
A) the required reserve ratio. B) marginal income tax rates. C) federal excise taxes. D) unemployment benefits.
In recent years, the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen, with the decrease in supply being larger than the decrease in demand. In this situation, the equilibrium price of orange juice
will have ________ and the equilibrium quantity of orange juice will have ________. A) decreased; increased B) decreased; decreased C) increased; decreased D) increased; increased