Which is a major criticism of a monopoly as a source of allocative inefficiency?
A. A monopolist will always make profits and that means that prices are too high.
B. A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms in other industries.
C. A monopolist has no incentive to produce efficiently because even the inefficient monopolist can be assured of economic profits.
D. A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to the monopolist's opportunity cost.
Answer: D
You might also like to view...
A tradable emissions permit:
A. entitles a firm to generate a specified amount of a given pollutant. B. is transferable. C. can be used to promote least-cost abatement. D. All of the responses are correct.
If incomes were equally distributed in the United States, each fifth of the population would receive ____ percent of the income.
A. 5 B. 10 C. 15 D. 20
A person removes the anti-pollution devices on his automobile. An external cost associated with this is
A. the feeling of guilt the person feels for violating the law. B. the ticket he gets when a highway patrol officer pulls him over. C. the man buys less gasoline, reducing the income of local gas stations. D. the man's neighbor washes his car more often because of increasing smog.
Refer to the information provided in Figure 30.1 below to answer the question(s) that follow.
Figure 30.1Refer to Figure 30.1. Suppose the economy is currently at Point B. If investors are optimistic about future growth in aggregate output, investment
A. moves to Point A. B. moves to Point C. C. moves to Point D. D. stays at Point B.