Question

Monopolies are inefficient compared to perfectly competitive firms because monopolies produce output with average total cost exceeding average revenue produce output with average total cost exceeding average revenue A produce more output than is social desirable produce more output than is social desirable B charge a price less than marginal revenue charge a price less than marginal revenue C charge a price greater than marginal cost charge a price greater than marginal cost D charge a price less than average total cost

Answer 1

Answer:

C. charge a price greater than marginal cost charge a price greater than marginal cost

Explanation:

• A monopoly exists when the person or the enterprise is the sole provider of the goods and commodities. The supplies have complete control of the market as they form a single entity.

• They are thus characterized by a lack of economic competition. Due to they are monopolies they change higher prices on the outputs rather than the average revenue. Hence are called price setters.