Suppose a lazy monopolist's fixed costs are higher than the fixed costs of an efficient monopolist. In all other respects the monopolists are the same. Which of the following statements about this lazy monopolist is true?
A) It charges a higher price than the monopolist producing efficiently.
B) It charges a lower price than the monopolist producing efficiently.
C) It produces fewer goods than the monopolist producing efficiently.
D) It sets price and quantity the same as the monopolist producing efficiently.

Question

Quizplus · Accepted Answer

A monopolist's pricing and output decisions are based on marginal costs and marginal revenue, not fixed costs. Therefore, both monopolists would set the same price and quantity if their marginal costs and demand conditions are identical.

Suppose a Lazy Monopolist's Fixed Costs Are Higher Than the Fixed