QUESTION 2 A monopoly is considered inefficient as compared to perfect competiti
ID: 1125711 • Letter: Q
Question
QUESTION 2 A monopoly is considered inefficient as compared to perfect competition because O a monopoly produces a lower output that perfect competition and charges a higher price. a monopoly produces a higher output that perfect competition and charges a higher price. a monopoly produces a lower output that perfect competition and charges a lower price. a monopoly produces a higher output that perfect competition and charges a lower price. QUESTION 3 Marginal cost intersects average variable cost when average variable cost is increasing. when average variable cost is decreasing. at the lowest point of MC. at the lowest point of AVC. O None of the above; they do not intersect.Explanation / Answer
Q2
Answer
a monopoly produces a lower output that perfect competition and charges a higher price.
Becuase the monopoly does not produce at MC=P which is socially efficient output.
Monopoly reduces output to earn profit which creates the deadweight loss to the society.
Q3
Answer
at the lowest point on the AVC
because the MC is the slope of VC so it intersects at the minimum of its average.