Question

In 1935, economics Nobel Prize winner John Hicks made a comment about the allocative inefficiency of monopolies. What did he mean when he said, "The best of all monopoly profits is a quiet life"?

Select the correct answer below:

Monopolies donate their profits to society trying to please their customers. The problem of inefficiency for monopolies often runs even deeper and involves becoming efficient over a longer period of time.

Monopolies may bank their profits and slack off on trying to please their customers. The problem of inefficiency for monopolies often runs even deeper and involves inefficiency over a longer period of time.

Monopolies may bank their profits and provide their customer new innovations. The problem of inefficiency for monopolies often means new technology and a fast paced changing world.

Monopolies may split their profits with their customers. The problem of inefficiency for monopolies often involves bureaucracy and wastes time.

Answer 1

In 1935, economics Nobel Prize winner John Hicks made a comment about the allocative inefficiency of monopolies. What did he mean when he said, "The best of all monopoly profits is a quiet life"?

Select the correct answer below:

1. Monopolies donate their profits to society trying to please their customers. The problem of inefficiency for monopolies often runs even deeper and involves becoming efficient over a longer period of time.
2. Monopolies may bank their profits and slack off on trying to please their customers. The problem of inefficiency for monopolies often runs even deeper and involves inefficiency over a longer period of time.
3. Monopolies may bank their profits and provide their customer new innovations. The problem of inefficiency for monopolies often means new technology and a fast paced changing world.
4. Monopolies may split their profits with their customers. The problem of inefficiency for monopolies often involves bureaucracy and wastes time.

Answer -

The Correct answer is OPTION 2 i-e  Monopolies may bank their profits and slack off on trying to please their customers. The problem of inefficiency for monopolies often runs even deeper and involves inefficiency over a longer period of time.

Reasoning - Basically Allocative efficiency is a concept in economic which is concerned with the social and societel level efficiency.It is about producing the optimum level of output in terms of quantity to satisfy the demand at effordable price. Allocative inefficiency is reverse of that which is not producing the optimum quantity of output and selling at higher profits and representing a domoinating market by the monopolistic nature until the competition rises.Price is always greater than the marginal cost ( p>mc ) in case of monopoly at profit maximizing output level.The consumer will suffer in the monopoly market as it will sell the lower quantity at higher price .The problem of inefficiency for the monopolicies is also often go more deeper these mentioned issues .This problem also involve the incentive for the efficiency over the longer time interval.Counterbalacning incentive are there.As on one side , the company strive for the new intellectual property and the inventions because they want more profit and monopoly .in this context the Nobel prize holder JOHN HICKS wrote in 1972 that the best of all monopoly profit is a quite life .Hid did not mean the written statement in a complimentary way.He is trying to deliver the comment meant that the monopolies many bank their profits and slack off on trying please their customer.

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