Which of the following statements is TRUE about the price that a monopolist charges?
A) The price is the same as the price that would be charged if there was perfect competition.
B) The difference between the price charged by a monopolist and a perfect competitor is due to differences in costs.
C) The value that society places on the last unit produced in a monopoly is greater than its cost.
D) Too much of the good is being produced in a competitive market and not enough is being produced in a monopoly. Due to the way that prices are set.

Question

Quizplus · Accepted Answer

Monopolists typically produce where marginal revenue equals marginal cost, but they charge a price that is higher than the marginal cost. This means the value (price) that consumers are willing to pay for the last unit produced (which reflects the value society places on it) is greater than the cost of producing that unit. This is in contrast to perfect competition, where price equals marginal cost.

Which of the Following Statements Is TRUE About the Price