Compared with a perfectly competitive market with similar cost conditions,a monopolist will have:
A)a higher output and lower price.
B)a lower output and lower price.
C)a higher output and a lower price.
D)a lower output and a higher price.
E)equal output and a higher price.

Question

Quizplus · Accepted Answer

A monopolist has the power to set the price of its product or service, whereas a perfectly competitive market has no such power. Therefore, in order to maximize profits, a monopolist will set a higher price and a lower output compared to a perfectly competitive market. This is because the monopolist can charge a higher price due to the lack of competition, and by producing a lower output, it can increase the scarcity of its product and therefore its value.

Compared with a Perfectly Competitive Market with Similar Cost Conditions,a