When a monopolist reduces the amount of output that it sells, the price of its output:
A)increases
B)decreases
C)stays the same
D)may increase or decrease, depending on the elasticity of demand

Question

Quizplus · Accepted Answer

When a monopolist reduces the amount of output that it sells, the supply in the market decreases while demand remains the same. This causes a shortage in the market, which results in an increase in the price of the output. Therefore, the price of the output increases when a monopolist reduces the amount of output it sells.

When a Monopolist Reduces the Amount of Output That It