![]() ![]() ![]() ![]() There's an inefficient allocation of resources. The bottom line is that when companies have a monopoly, prices are too high and production is too low. With higher prices, consumers will demand less quantity, and hence the quantity produced and consumed will be lower than it would be under a more competitive market structure. When firms have such power, they charge prices that are higher than can be justified based upon the costs of production, prices that are higher than they would be if the market was more competitive.
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