Re: ::: vuaskari.com ::: ECO401 MCQs discussion threads

@Zahid option 2nd is 101% sure 

Following are the disadvantages of monopoly EXCEPT:

       ► Monopolists earn higher profits.

       ► Monopolists produce high quality goods at higher prices.     Page no 76

       ► Most of the "surplus" (producer + consumer surplus) accrues to monopolists.

       ► Monopolists do not pay sufficient attention to increasing efficiency.

Disadvantages of monopolies:

i. Monopolists produce lower quantities at higher prices compared to perfectly competitive

firms. This is because monopolists do not produce where P=MC (the point of allocative

efficiency) nor at P= AC minimum (the point of cost efficiency).

ii. Monopolists earn supernormal profits compared to perfectly competitive firms

iii. Most of the "surplus" (producer + consumer surplus) accrues to monopolists.

iv. Monopolists do not pay sufficient attention to increasing efficiency in their production

processes.

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