(True or False) Monopolists are neither productively efficient nor allocative efficient, and perfect competition is both...

(True or False) Monopolists are neither productively efficient nor allocative efficient, and perfect competition is both productively efficient and allocatively efficient. However, Pareto optimal requires it is impossible to make one person better off without making at least one other worse off. And expalin why

Expert Solution

Answer : 2) The answer is "True".

The productive efficiency occur at that output level where MC (Marginal Cost) = Minimum ATC (Average Total Cost) occur. The monopolist always produce that output level where ATC is not minimum. Hence monopolists are not productively efficient. But for perfect competition in long run the ATC become minimum on production level. For this reason in long run the perfect competition become productively efficient.

The allocative efficiency occur at that output level where MC = AR (Average Revenue) occur. For monopolist the MR curve is half of MR (Marginal Revenue) curve. This means that for monopolist, MR = 1/2 * AR. A monopolist always produce that output level where MR = MC occur. As for monopolist MR is half of AR curve hence at monopolists' production level MC = AR does not occur. For this reason the monopolists are not allocatively efficient. But for perfect competition at production level MC = AR occur. So, the perfect competition is allocatively efficient.

At Pareto optimal outcome level all available persons gets their efficient outcomes. In this situation if modifiation is required then at least one person worse off is required to make another person better off. Therefore, the given statement is true.

Rahul Sunny answered 6 months ago

2. Monopolists are neither productively efficient nor allocative efficient, and perfect competition is both productively efficient...

2. Monopolists are neither productively efficient nor allocative efficient, and perfect competition is both productively efficient and allocatively efficient. However, Pareto optimal requires it is impossible to make one person better off without making at least one other worse off. Ture or false. And why.

Briefly explain why monopolists are neither productively nor allocatively efficient and briefly describe what results from...

Briefly explain why monopolists are neither productively nor allocatively efficient and briefly describe what results from these circumstances.

Monopoly Vs. Perfect Competition Monopolists do not produce at minimum efficient scale in the short run...

Monopoly Vs. Perfect Competition Monopolists do not produce at minimum efficient scale in the short run or long run Monopolists are not allocatively efficient Monopolists have the ability to earn profits in the long run Our main concern about monopoly power is that you have power you will use it for your own benefit. Monopolists, therefore, produce "too little" which is sold at "too high" a price. Draw the case of: the Price Setter Profit Maximizer Profit < 0

In monopolistically competitive markets, neither allocative nor productive efficiency is realized" explain.

True or false? a) “Under perfect competition the value of the Lerner Index is equal to...

True or false? a) “Under perfect competition the value of the Lerner Index is equal to 0.” _____________ b) “In a monopolistic market the deadweight loss does not always occur”. _____________ c) “The existence of scale economies is the main reason for the existence of multiproduct firms”. _____________ d) “The short run industry supply curve is obtained by adding up the average cost curves of all the firms in the industry.” ______________

Is this quote true? "'Perfect competition' is considered both the ideal and the default state in...

Is this quote true? "'Perfect competition' is considered both the ideal and the default state in Economics 101. So-called perfectly competitive markets achieve equilibrium when producer supply meets consumer demand."

Economists consider monopolists to be efficient, since they earn greater profits than perfect competitors. to be...

Economists consider monopolists to be efficient, since they earn greater profits than perfect competitors. to be inefficient since all consumer surplus is transferred to the monopolist in the form of profits. to be inefficient since they earn less producers’ surplus than all firms taken together in a competitive market. to be inefficient since the monopolist restricts output from the competitive level, thus creating dead-weight loss.

True or false: If two consumers both view X and Y as perfect substitutes and both...

True or false: If two consumers both view X and Y as perfect substitutes and both consumers like an additional unit of X better than an additional unit of Y, then it is impossible for them to make a Pareto-improving trade away from their initial endowment. Explain.

Indicate whether True or False a)In perfect competition, price is equal to marginal revenue while in...

Indicate whether True or False a)In perfect competition, price is equal to marginal revenue while in monopoly price is greater than marginal revenue b)No supply curve exists for a monopoly in the sense that a supply curve exists for a perfectly competitive firm c)Because the marginal revenue curve for a monopolist lies below its demand curve,the profit -maximizing price of the monopolist will be above marginal cost d)The profit- maximizing level of output for a monopolist is the one at...

What is first-degree price discrimination? Is the outcome under perfect price discrimination allocatively and productively efficient?...

What is first-degree price discrimination? Is the outcome under perfect price discrimination allocatively and productively efficient? How does your answer change if the monopolist cannot price discriminate?

Question