Which are more economically? efficient, perfectly competitive markets or? monopo

Question

Which are more economically? efficient, perfectly competitive markets or? monopolies?

Compared to? monopolies, perfectly competitive markets are

A. more economically efficient because they produce at lower average total cost.

B. more economically efficient because they produce where marginal revenue equals marginal cost.

C. more economically efficient because they result in more economic surplus.

D. less economically efficient because they result in more economic surplus

E. less economically efficient because they result in more deadweight loss

Explanation / Answer

Compared to monopolies, perfectly competitive markets are more economically efficient because they result in a more economic surplus. Hence the correct answer is (C). Monopolies result in a deadweight loss while there exists no deadweight loss in the case of perfectly competitive markets.

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