A Feature of Monopoly That Leads to Unfavorable Consequences Is

question 46

Multiple Choice

A feature of monopoly that leads to unfavorable consequences is that it:

• A) reduces income inequality.
• B) sets marginal cost equal to price.
• C) produces less output than if perfectly competitive firms characterized the same industry.
• D) charges a lower price than if perfectly competitive firms characterized the same industry.

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Definitions:

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.

Administrative Cost

Refers to expenses related to the general operation of a business, including office supplies, management salaries, and other non-production related costs.

Equilibrium Pricing

The point at which the supply of a product matches demand, setting the market price.

Deadweight Loss

A loss in economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.