Monopolies Are Inefficient Because They (I)

question 264

Multiple Choice

Monopolies are inefficient because they (i)
Eliminate barriers to entry.
(ii)
Price their product at a level where marginal revenue exceeds marginal cost.
(iii)
Restrict output below the socially efficient level of production.

• A)(i) and (ii) only
• B)(ii) and (iii) only
• C)(iii) only
• D)(i), (ii), and (iii)

Analyze the relationship between price, total revenue, and marginal revenue in monopolistic markets.

Determine the impact of price changes on marginal revenue.

Identify conditions under which marginal revenue is positive, negative, or zero.

Calculate the marginal revenue for given levels of output.

---

Definitions:

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It necessitates the need for prioritization and choice.

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating resources to satisfy their wants and needs.

Production

The process of creating, manufacturing, or enhancing goods and services, involving the combination of resources like labor and raw materials.

Production Possibilities Frontier

The Production Possibilities Frontier (PPF) is a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.