Efficiency Outcomes for Monopoly
- Allocative Efficiency will not naturally exist in Monopoly. The profit maximizing firm sets MR = MC leading to a price above and quantity below those where P = MC.
- Productive Efficiency would only occur in Monopoly by very unlikely chance if MR = ATC where MR = MC. In general, productive efficiency will not occur and no market forces will encourage this outcome.
- Technical Efficiency is not guaranteed by market forces, however the profit motive should lead the firm to at least attempt to achieve this outcome.
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