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Explain the deadweight loss and inefficiency

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Reference no: EM133126962

Suppose a friend is taking an economics course at another college or university and his professor uses a different textbook. Your friend, after learning about monopolies and the lost gains from trade that result from monopolies, becomes very agitated about firms with market power, and he makes this statement: "It should be strictly forbidden for any company, in any market, to have more than 50% market share-market power like this always leads to higher prices, deadweight loss and inefficiency!" After you calm them down, how would you respond to this statement? Is your friend right? Why or why not?

Reference no: EM133126962

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