Monopolies Are Inefficient for All but Which of the Following

question 9

Multiple Choice

Monopolies are inefficient for all but which of the following reasons?

• A)Price is greater than Marginal Cost.
• B)The total surplus represents worker exploitation.
• C)The sale of additional units is Pareto- improving.
• D)The potential surplus is unrealized.

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Definitions:

Marginal Profit

The additional profit earned by producing and selling one additional unit of a good or service.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, holding all other inputs constant.

Variable Input

An input whose quantity can be changed in the short term to adjust production levels, such as labor or raw materials.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit changes as production volume increases.