From the Viewpoint of Allocative Efficiency, Which of the Following

question 64

Multiple Choice

From the viewpoint of allocative efficiency, which of the following is a defect of pure monopoly?

• A) The monopolist undersupplies the market and charges too high a price.
• B) The monopolist is a revenue maximizer not a profit maximizer.
• C) A monopolist has little incentive to produce efficiently (at a low cost).
• D) All of the above are true.

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Definitions:

Economic Entity Assumption

An accounting principle that states a company and its owner(s) are separate entities for financial reporting purposes.

Expenses

Outflows or other uses of assets or incurrences of liabilities during a period from delivering goods, rendering services, or carrying out other activities.

Proprietorship

A business structure owned by a single individual who is responsible for its liabilities and entitled to its profits.

CPA

Certified Public Accountant, a designation awarded to individuals who pass an examination and meet certain education and experience requirements in the field of accounting.