The standard monopoly model eliminates the monitoring problem by assuming that:
A) the owner does not maximize profit.
B) marginal cost is zero, and so the output at which profit is maximized is the same as the output at which sales revenues are maximized.
C) the owner of the firm makes all the decisions.
D) the owner of the firm has no control over decisions.

Question

Quizplus · Accepted Answer

In the standard monopoly model, it is assumed that the owner of the firm makes all the decisions, thereby eliminating any monitoring problem since there is no separation between ownership and control.

The Standard Monopoly Model Eliminates the Monitoring Problem by Assuming