Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's
A)price, output, and average total cost would all be higher.
B)price and average total cost would be higher, but output would be lower.
C)price, output, and average total cost would all be lower.
D)price and output would be lower, but average total cost would be higher.

Question

Quizplus · Accepted Answer

In a pure monopoly, the monopolist maximizes profit by producing at a point where marginal revenue equals marginal cost, which typically results in a higher price and lower output compared to a purely competitive firm. The average total cost may also be higher due to lack of competitive pressure to minimize costs.

Comparing a Pure Monopoly and a Purely Competitive Firm with Identical