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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