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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Definitions:

Available-For-Sale Securities

Financial assets that are intended to be sold before their maturity date but are not actively traded or held to maturity, subject to changes in fair value recorded in other comprehensive income.

Trading Securities

Financial instruments like stocks or bonds that are bought and sold for the purpose of generating profits on short-term fluctuations in price.

Trading Gains

Profits realized from buying and selling financial instruments within a short period, aiming to benefit from market price movements.

Minority Passive Investments

Investments in which the investor holds a non-controlling stake and does not actively participate in management.