Which of the following statements is true regarding a profit maximizing monopoly
A)it will cause a deadweight loss
B)it will produce less than perfect competition
C)it will sell at a higher price than perfect competition
D)all of the above

Question

Quizplus · Accepted Answer

A profit-maximizing monopoly causes a deadweight loss because it restricts output below the socially optimal level, leading to inefficiency. It produces less than what would be produced under perfect competition because it restricts output to increase prices and maximize profits. Consequently, it sells its product at a higher price than would prevail under perfect competition, where prices are pushed to the level of marginal costs.

Which of the Following Statements Is True Regarding a Profit