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6. Does a monopoly cause inefficiency? Provide a detailed discussion.
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Answer : 6) Yes, inefficiency occur in monopoly market. Because in a market the efficiency occur when at equilibrium Demand = MC occur. But in monopoly market at equilibrium MR = MC occur. As in monopoly market the MR curve lies below the demand curve hence the monopoly market's produced quantity level is less than the efficient output level. Efficient output level is that output level where Demand = MC occur. As the monopoly market's produced quantity level is less than the efficient output level hence the inefficiency occur in monopoly market.

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