When comparing a monopoly with a competitive industry, monopoly quantity:
A) and monopoly price will be lower than that of a competitive firm.
B) will be higher, and monopoly price will be lower, than that of a competitive firm.
C) will be lower, and monopoly price will be higher, than that of a competitive firm.
D) and monopoly price will be higher than that of a competitive firm.

Question

Quizplus · Accepted Answer

In a monopoly, the firm faces no competition and therefore has the ability to restrict output to maximize profits. This results in lower quantities produced compared to a competitive industry, which has numerous firms competing with each other. However, since the monopolist has market power, they can set a higher price than a competitive firm, resulting in a higher price but lower quantity produced. So, monopoly quantity will be lower, and the monopoly price will be higher than that of a competitive firm.

When Comparing a Monopoly with a Competitive Industry, Monopoly Quantity