How does a monopoly's output level affect market efficiency compared to a perfectly competitive market?

A monopoly is a market structure where a single company controls the entire supply of a product or service. In this situation, the monopoly sets its output level to maximize profits, which usually means producing less than what would be produced in a perfectly competitive market. This lower output leads to higher prices for consumers and can create a loss of market efficiency, meaning that fewer people can afford the product or service. For example, if a monopolist sells fewer electric cars than a competitive market would, consumers may pay more and have fewer choices. In contrast, a perfectly competitive market produces at a level where supply equals demand, leading to more efficient outcomes, where prices are lower and more consumers can access the product.