Problem
1. Suppose that a monopoly industry produces less output than a similar competitive industry. Discuss why this may be considered socially undesirable. Is this because it is always socially beneficial to produce more of some product?
2. If competitive firms earn zero economic profits, explain why anyone would invest money in them. (Hint: What is the role of the opportunity cost of capital in economic profit?)
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.