When compared to a perfectly competitive market, a single-price monopoly with the same costs produces ________ output and charges ________ price.
A) a smaller; the same
B) the same; a higher
C) a larger; a lower
D) a smaller; a higher
E) a smaller; a lower

Question

Quizplus · Accepted Answer

In a single-price monopoly, the firm has market power, which allows it to charge a higher price than in a perfectly competitive market. The firm reduces its output to create scarcity and increase the price. Therefore, a single-price monopoly produces a smaller output and charges a higher price compared to a perfectly competitive market with the same costs.

When Compared to a Perfectly Competitive Market, a Single-Price Monopoly