The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4
D 1 : Demand curve of group 1
D 2 : Demand curve of group 2
MR 1 : Marginal revenue of group 1
MR 2 : Marginal revenue of group 2
MC: Marginal cost
-Compared with a perfectly competitive market with similar cost conditions, a monopolist will have:
A)a higher output and a lower price.
B)a lower output and a lower price.
C)equal output and a higher price.
D)a lower output and a higher price.

Question

The figure given below shows the demand curves of two classes of buyers, for tickets to a football match.Figure 11.4
  D 1 : Demand curve of group 1
D 2 : Demand curve of group 2
MR 1 : Marginal revenue of group 1
MR 2 : Marginal revenue of group 2
MC: Marginal cost
-Compared with a perfectly competitive market with similar cost conditions, a monopolist will have:
A)a higher output and a lower price. 
B)a lower output and a lower price. 
C)equal output and a higher price. 
D)a lower output and a higher price.

Quizplus · Accepted Answer

A monopolist faces a downward sloping demand curve and chooses their output level where MR=MC. In this case, the MC curve is not provided, but we can see that the MR curves of both groups of buyers intersect the horizontal axis at a quantity lower than the sum of their individual quantities demanded at a price of zero. This means that the monopolist will produce a lower quantity than the competitive quantity, resulting in a higher price. Therefore, the correct choice is D, a lower output and a higher price.

The Figure Given Below Shows the Demand Curves of Two