When a firm operates under conditions of monopoly,what do we know about its pricing
A)Its pricing is not constrained.
B)Its pricing is constrained by marginal cost.
C)Its pricing is constrained by demand.
D)Its pricing is constrained only by its social agenda.

Question

Quizplus · Accepted Answer

When a firm operates under conditions of monopoly, its pricing is constrained by demand. It can set the price higher than the marginal cost as it does not face any competition, but it still needs to consider the demand elasticity because a very high price may lead to a decrease in demand and lower profits. Therefore, the pricing decision is still influenced by consumer behavior and market conditions.

When a Firm Operates Under Conditions of Monopoly,what Do We