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Chapter 9: Q23. (page 233)

Is a monopolist allocatively efficient? Why or why not?

Short Answer

Expert verified

Monopolists are not allocatively proficient, on the grounds that they don't deliver at the amount where P = MC.

Step by step solution

01

definition 

Monopolist is the person who overwhelms and controls the market for a particular decent or administration since he is the spirit merchant of a ware and has no nearby substitute. For eg : Railways

02

Explanation

Monopolists don't create at the amount where P = MC. Accordingly, monopolists produce less, at a higher normal expense, and charge a greater cost than would a mix of firms in an entirely aggressive industry. Monopolists likewise may need motivations for advancement, since they need not dread passage, for that reason they are not allocative effective.

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Most popular questions from this chapter

How is the demand curve perceived by a perfectly competitive firm different from the demand curve perceived by a monopolist?

Imagine that you are managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10%less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?

What is the usual shape of a marginal revenue curve for a monopolist? Why?

Is a monopolist a price taker? Explain briefly.

Draw a monopolist’s demand curve, marginal revenue, and marginal cost curves. Identify the monopolist’s profit-maximizing output level. Now, think about a slightly higher level of output (say Q0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
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