Which of the Following Is a Major Criticism of a Monopoly

question 139

Multiple Choice

Which of the following is a major criticism of a monopoly as a cause of allocative inefficiency?

• A)A monopolist fails to expand output to the level where the consumers' evaluation of an additional unit is just equal to its opportunity cost
• B)A monopolist has no incentive to produce efficiently, because even if it pays no attention to the costs of production, it will be guaranteed an economic profit
• C)A monopolist will always make profits therefore providing an incentive to keep prices at the level that maximizes consumer surplus
• D)A monopolist has an advantage because it can purchase the resources in a competitive market
• E)Consumer surplus would no longer be equal to producer surplus

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Definitions:

Highly Inflationary Economy

An economy experiencing rapid and excessive inflation rates, often leading to adjustments in financial reporting and monetary policy.

Functional Currency

The form of monetary exchange prevalent in the primary economic zone where an organization engages and creates cash flow.

Exchange Rate

The rate at which one currency can be exchanged for another currency, affecting international trade and investments.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net income or loss.