Question:
Why are Monopolies not Productive or Allocative Efficient?
Author: eric_galvaoAnswer:
-Monopolies do not have to produce at the Lowest Point on the AC Curve to get the Profit it wants. This makes Monopolies Productive Inefficient. -The Price also is charged much more than the MC - the Cost to the Firm. This means that Monopolies are Allocative Inefficient -Furthermore, the Product the Monopoly is producing will be Under-consumed - Consumers will not be getting as much as they’d like (Consumer Surplus)
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