Question

A nondiscriminating pure monopoly is generally viewed as being _____. rev: 05_15_2018 Multiple Choice neither productively nor allocatively efficient productively efficient, but not allocatively efficient allocatively efficient, but not productively efficient both productively and allocatively efficient

Answer 1

Answer:

The correct answer is:  neither productively nor allocatively efficient.

Explanation:

A non-discriminating pure monopoly is considered to be neither productively nor allocatively efficient. Such a monopoly faces a downward-sloping demand curve. It is a price maker and fixes price and output at the point where marginal revenue and marginal cost are equal and the price exceeds the marginal cost.  

It does not produce at the socially optimal level of output. The resources are thus not efficiently allocated. The production can be increased by the more efficient allocation of resources.