Final answer:
Monopolies and natural monopolies are not allocatively efficient because they do not supply enough output to meet demand at the socially optimal price.
Step-by-step explanation:
A monopoly or natural monopoly is not allocatively efficient because it does not supply enough output to meet the demand at the socially optimal price. Allocative efficiency occurs when resources are allocated in a way that maximizes social welfare, but a monopoly often restricts output and charges higher prices to maximize its own profits.
For example, in a perfectly competitive market, where there are many firms producing identical products, the market forces of supply and demand determine the equilibrium price and quantity. However, a monopoly has the ability to control the supply and can set higher prices than what would exist in a competitive market.
In contrast, a natural monopoly occurs when there are significant cost advantages to having only one firm supplying a particular good or service. While a natural monopoly may benefit from economies of scale, it can still be allocatively inefficient if it sets prices above the marginal cost of production.