What must a monopoly, such as a public utility, account for when setting its prices?
A) A monopoly, because it has no competitors, can set prices as high as it likes.
B) A monopoly must consider customer demand, and then set prices at the most profitable level.
C) A monopoly must take into account what its top competitors are charging for the same product or service.
D) A monopoly has no say in what prices it will charge because the government sets the prices for all monopolistic industries.
E) A monopoly must look at the importance of each client, and then determine what respective rate each will be charged.

Question

Quizplus · Accepted Answer

A monopoly must consider customer demand in order to maximize profits while still maintaining a level of demand for its product or service. Setting prices too high may result in decreased demand and lost revenue, while setting prices too low may not bring in enough revenue to cover costs and make a profit. Therefore, a monopoly must find the most profitable level of pricing while still maintaining a level of demand that ensures profitability.

What Must a Monopoly, Such as a Public Utility, Account