In a monopoly, which of the following best describes how market power affects allocative efficiency?

In a monopoly, one company controls the entire market for a product or service, which gives it significant market power. This means the monopolist can set prices higher than what would occur in a competitive market, leading to fewer people being able to afford the product. Allocative efficiency happens when resources are distributed in a way that maximizes total satisfaction for consumers and producers. However, in a monopoly, the higher prices and reduced quantity of goods mean that not all consumer needs are met, resulting in a loss of efficiency. For example, if a single company sells a lifesaving medicine at a high price, some people may not be able to buy it, even though they need it, showing that the market is not efficiently meeting everyone's needs.