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UI Post-UTME Economics 2025 (Model questions) Question 8

Question 8

Market Structures

In a monopoly market, compared with perfect competition, the equilibrium outcome typically results in:
I. Higher prices
II. Lower output
III. Deadweight welfare loss
IV. Productive efficiency

  1. A.I, II and III only
  2. B.I and IV only
  3. C.II, III and IV only
  4. D.All of the above
Show the answer and explanation

Answer: A (I, II and III only)

Explanation

A monopolist restricts output and charges more, causing a deadweight loss. It does not produce at minimum average cost, so it is not productively efficient.