Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:
A) higher price and sell more.
B) lower price and sell more.
C) higher price and sell less.
D) lower price and sell less.
E) similar price and sell the same.

Question

Quizplus · Accepted Answer

A monopoly firm has market power, which means it can charge a higher price than a perfectly competitive firm without losing all of its customers. This is because there are no close substitutes for the monopoly firm's product, and consumers have no alternative but to pay the higher price. As a result, the monopoly firm will sell less than a perfectly competitive firm at a higher price.

Compared to a Perfectly Competitive Firm with the Same Cost