A monopoly will not necessarily be technically efficient because which of the following is true?Group of answer choicesBarriers to entry will keep firms from enteringFirms will enter until the price is lowered to where price equals average costMonopolies have no close substitutesMonopolies charge the highest price on the demand curve
Question
A monopoly will not necessarily be technically efficient because which of the following is true?Group of answer choicesBarriers to entry will keep firms from enteringFirms will enter until the price is lowered to where price equals average costMonopolies have no close substitutesMonopolies charge the highest price on the demand curve
Solution
A monopoly will not necessarily be technically efficient because "Barriers to entry will keep firms from entering" is true. In a monopoly, one firm dominates the market due to high barriers to entry, such as high startup costs, exclusive access to resources, or government regulations. These barriers prevent other firms from entering the market and competing, which can lead to inefficiencies. In a perfectly competitive market, inefficiencies are often eliminated as firms compete on price and quality. However, in a monopoly, the lack of competition can allow inefficiencies to persist.
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