When a monopolist reduces the quantity of output it produces and sells,
A) the price of its output increases.
B) the price of its output remains constant.
C) the price of its output decreases.
D) the profits for the firm always decrease.

Question

Quizplus · Accepted Answer

When a monopolist reduces the quantity of output it produces and sells, the demand for its product may remain constant or decrease but the supply is reduced, leading to an increase in the price of the output. This is because the monopolist has market power and can influence prices by restricting supply to increase profit margins.

When a Monopolist Reduces the Quantity of Output It Produces