Which Is a Major Criticism of a Monopoly as a Source

question 82

Multiple Choice

Which is a major criticism of a monopoly as a source of allocative inefficiency?

• A) A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to its opportunity cost.
• B) A monopolist has no incentive to produce efficiently, because even the inefficient monopolist can be assured of economic profits.
• C) A monopolist will always earn profits, and that means that prices are too high.
• D) A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms can.

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Definitions:

Flashbulb Memories

Vivid, detailed memories of significant or emotional events, which seem to be recorded in one's memory just like a photograph.

Confidence

The feeling or belief that one can rely on someone or something; firm trust.

Distortion

A modification of the original shape or other characteristic of an object, image, sound, or waveform.

Eyewitness Memory

The recollection by individuals of events they have witnessed, especially significant to criminal investigations.