Question

Discuss whether or not a monopoly is fair and efficient in the marketplace.

Answer 1

Since monopoly profit-maximising condition is

MR=MC

The profit-maximizing condition of the perfectly competitive firm is

P=MC

So a monopolist price is always greater than the price of the perfectly competitive firm.

The quantity of a monopolist is less than the profit-maximizing quantity of the perfectly competitive firm.

Hence a perfectly competitive firm is known as the fair as well as the efficient firm compare to the monopoly firm. Hence a monopolist firm creates Dead weight loss while a competitive firm do not create a deadweight loss.

Hence a monopoly is neither fair nor efficient in the marketplace.