Which of the following is most likely to result from the imposition of a price ceiling on the price charged by a monopolist?
A)The monopolist will increase output after the imposition of the price ceiling.
B)The monopolist will increase product quality in order to earn the same level of profit.
C)The monopolist's profit will increase as a result of the price ceiling.
D)The monopolist's demand curve will become horizontal for all levels of output.

Question

Quizplus · Accepted Answer

A price ceiling set below the monopolist's charging price would lead to an increase in quantity demanded. To meet this demand, the monopolist is likely to increase output, assuming the price ceiling is above the marginal cost of production.

Which of the Following Is Most Likely to Result from the Imposition