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Provide reasons why monopolists do not exhibit resource allocative efficiency. Why monopolists cannot obtain any price they wish. Deadweight losses when a firm produces at Q =MC. Social costs of maximizing marginal utility.
1. The perfectly competitive firm exhibits resource allocative efficiency (P=MC), but the single price monopolist does not. What is the reason for this difference?
2. Because the monopolist is a single seller of a product with no close substitutes, is it able to obtain any price for its good that it wants? Why or why not?
3. Is there a deadweight loss if a firm produces the quantity of output at which price equals marginal cost? explain.
4. It has been noted that rent seeking is individually rational, but socially wasteful. Explain.
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