Which is a pro of a monopoly?

• A. Efficiency
• B. Can Set Extortionate Prices
• C. Company Cartels
• D. Can Handle High R&D Prices

Answer: (A)

Economies of scale can make a monopoly efficient because a single firm can spread large fixed costs over a bigger output, pushing down the average cost per unit. In industries with high fixed costs and relatively low marginal costs (natural monopolies), this large-scale production can be more cost-efficient than many smaller firms duplicating the infrastructure. That productive efficiency is a genuine advantage of having one producer. Of course, this doesn’t guarantee that prices reflect costs for consumers, and monopolies can still have higher prices or restricted output. The other options describe pricing power, collusion, or the idea of funding high R&D as a guaranteed benefit, which aren’t direct efficiency advantages.