A monopoly produces more than would be produced if it adhered to the MC = P standard.

Question

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A monopoly maximizes its profits by producing at a level where its marginal revenue (MR) equals marginal cost (MC), not where MC equals price (P). Because a monopoly has market power and faces a downward-sloping demand curve, its MR is always below price. Therefore, a monopoly produces less and charges a higher price than would be the case under perfect competition, resulting in a deadweight loss to society.

A Monopoly Produces More Than Would Be Produced If It