Which of the following can prevent markets from reaching efficiency? I. price regulations that cap the price that may be charged II. increasing marginal cost III. monopoly

A monopoly is allocatively efficient compared to perfect competition

Indicate whether the statement is true or false

Suppose there is a high inequality in household income between the highest and the lowest income groups in one country. In response, the government raises the income tax for the highest income group and provides subsidies to the lowest-income group. What

would happen to the Lorenz curve as a result of the government programs? Explain. What will be an ideal response?