Which of the Following May Eliminate Some or All of the Inefficiency

question 170

Multiple Choice

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

• A) The government can regulate the monopoly.
• B) The monopoly can be prohibited from price discriminating.
• C) The monopoly can be forced to operate at a point where its marginal revenue is equal to its marginal cost.
• D) None of the above would eliminate any inefficiency associated with a monopoly.

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Definitions:

Loanable Funds

Money available for borrowing. The market for loanable funds is where borrowers and lenders come together, influencing interest rates.

David Ricardo

A British political economist known for his theory on comparative advantage, implying that countries should specialize in and trade goods in which they have a relative efficiency.

Theory Of Rent

A principle explaining how the price and allocation of land and its resources are determined based on their use, productivity, and locational advantages.

Efficiently Allocating

The process of distributing resources in a manner that maximizes the net benefits received from their use.