A profit-maximising monopoly produces a lower output level than would be produced if the industry was perfectly competitive.

Question

Quizplus · Accepted Answer

A monopolist restricts its output to a level where marginal revenue equals marginal cost, which is below the level of output that would be produced in a perfectly competitive industry, where firms produce where price equals marginal cost. This results in higher prices and lower output levels in a monopoly market.

A Profit-Maximising Monopoly Produces a Lower Output Level Than Would