In comparison to perfect competition, monopoly
A)motivates greater quality innovation.
B)motivates greater cost saving by management.
C)reduces the motivation to make a profit.
D)reduces the motivation to innovate.

Question

Quizplus · Accepted Answer

Monopoly reduces the motivation to innovate because there is no competition, so the monopolist doesn't need to improve its product or lower its price to attract customers. In perfect competition, firms are motivated to innovate to gain a competitive edge and attract more customers. Therefore, monopoly can lead to a lack of incentive for technological advancement and innovation.

In Comparison to Perfect Competition, Monopoly