Why monopoly is not productive efficient?

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1086071

2026-08-18 20:50

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Monopoly is not productively efficient because it restricts output to maximize profits, leading to a higher price than in competitive markets. This results in a deadweight loss, where potential gains from trade are not realized, as consumer demand is not fully met. Additionally, monopolies may lack the incentive to innovate or reduce costs, since they face no competition. As a result, resources are not allocated optimally, diminishing overall economic welfare.

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