Compared to a perfectly competitive firm, a monopolist:
A) charges a higher price.
B) produces lower output.
C) fails to achieve an efficient allocation of resources.
D) all of these.

Question

Quizplus · Accepted Answer

A monopolist charges a higher price than a perfectly competitive firm because it has market power and can set its own price. It also produces lower output because it restricts supply in order to maintain a higher price. This leads to a inefficient allocation of resources because the quantity produced by the monopolist is lower than the quantity that would be produced if the industry were perfectly competitive. Therefore, all of the given options are correct.

Compared to a Perfectly Competitive Firm, a Monopolist