Monopolists Are Said to Be Allocatively Inefficient Because

question 330

Multiple Choice

Monopolists are said to be allocatively inefficient because

• A)they produce where MR > MC.
• B)at the profit-maximizing output, price is greater than AVC.
• C)they produce only the type of product they desire and do not consider the consumer.
• D)at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost.

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Definitions:

Framing Error

A mistake in decision-making caused by misrepresenting or misinterpreting the context or information surrounding the decision.

Escalating Commitment

The phenomenon of individuals or organizations continuing to invest in a decision, project, or course of action despite evidence of its failure.

Anchoring Bias

A cognitive bias where an individual depends too heavily on an initial piece of information (the "anchor") when making decisions.

Escalating Commitment

A behavioral pattern where an individual or organization continues to follow a failing course of action due to emotional attachment or the desire to justify prior investments.