Which Is a Major Criticism of a Monopoly as a Source

question 394

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:

Lenticels

Small, corky areas on the stems and roots of plants that allow for gas exchange with the surrounding air.

Gas Exchange

The process by which organisms exchange gases with their environment, including the uptake of oxygen and the release of carbon dioxide.

Periderm

is the protective outer secondary layer of bark in woody plants and trees, comprising the phellem, phellogen, and phelloderm.

Sapwood

The outer, younger part of a tree's trunk or branch that is active in transporting water and minerals from the roots to the leaves.