Compared to a competitive industry,ceteris paribus,a monopoly:
A)sells a higher quantity and charges a higher price.
B)sells the same quantity but charges a higher price.
C)sells a smaller quantity but charges the same price.
D)sells a smaller quantity but charges a higher price.

Question

Quizplus · Accepted Answer

In a monopoly, there is no competition, and the monopolist has control over the market. Therefore, they can charge a higher price for a smaller quantity sold, as there are no competitors offering a similar product at a lower price. This allows the monopolist to maximize their profits by producing and selling a quantity that equates marginal revenue to marginal cost, which is lower than the quantity produced by a competitive industry. Hence, the correct choice is D, as a monopoly sells a smaller quantity but charges a higher price.

Compared to a Competitive Industry,ceteris Paribus,a Monopoly