A Feature of Monopoly That Leads to Unfavorable Consequences Is

question 233

Multiple Choice

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

• A) increases income inequality.
• B) sets marginal cost equal to price.
• C) produces more 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:

Average Total Cost

the total cost of production divided by the number of units produced, reflecting the average cost per unit of output.

Average Variable Cost

The total variable costs of production divided by the number of units produced, indicating the variable cost per unit.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm or production process scales up, contrary to economies of scale where costs decrease.