In the long-run equilibrium of a monopoly, which of the following statements is true?

Multiple choice question for Monopoly. Select an option, then review the explanation below.

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The company achieves productive efficiencyThe company fails to allocate resources efficientlyThe company produces where marginal cost is below marginal revenueThe company operates at the socially optimal output

Explanation

In a monopoly's long-run equilibrium, the firm does not allocate resources efficiently, leading to allocative inefficiency. This occurs because the monopolist restricts output to maximize profits, resulting in a price higher than marginal cost. Hence, option B is correct.

Practice related questions from the same subject.

1.Which option best describes the concept of price discrimination?
2.In contrast to a perfectly competitive market, what is a monopolist more inclined to do?
3.In a pure monopoly market, how does the price compare to the marginal revenue?
4.What action should a monopolist take when marginal revenue is greater than marginal cost?
5.What is the likely impact on production costs if a natural monopoly is divided into several smaller companies by regulators?

In the long-run equilibrium of a monopoly, which of the following statements is true?

Explanation

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