If a monopoly market structure is transformed into a perfectly competitive one,holding all else constant,price will _____ and output will _____.
A)fall;fall
B)fall;increase
C)increase;increase
D)increase;fall

Question

Quizplus · Accepted Answer

In a monopoly market structure, there is only one producer who has complete control over the market, therefore, they can charge a higher price and limit the output to maximize their profits. On the other hand, in a perfectly competitive market structure, there are many producers who have no control and must compete with each other, so they have to keep the price low and output high to survive in the market. Therefore, if a monopoly market structure is transformed into a perfectly competitive one, the price will fall and the output will increase.

If a Monopoly Market Structure Is Transformed into a Perfectly