A ________ between price and quantity sold because ________.
A) monopoly faces a tradeoff; to sell a larger quantity, it must lower its price
B) monopoly does not face a tradeoff; it controls market entry and can sell at any price and any quantity
C) natural monopoly faces a tradeoff; it can always price discriminate
D) natural monopoly does not face a tradeoff; it is a price maker
E) perfectly competitive firm faces a tradeoff; it is a price taker

Question

Quizplus · Accepted Answer

Monopoly faces a tradeoff between price and quantity sold because to sell a larger quantity, it must lower its price. This is because a monopoly is the sole producer of a good or service with no close substitutes, so it has significant control over the market price. As it lowers the price, it can sell more quantity of the product, but it also loses revenue on each unit sold due to the lower price. Therefore, a monopoly must balance the tradeoff between offering larger quantities at a lower price or fewer quantities at a higher price.

A ________ Between Price and Quantity Sold Because ________

A Between Price and Quantity Sold Because