A monopolist is willing to lose some customers by charging higher prices, since this results in higher profits.

Question

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A monopolist has the ability to set prices higher than their marginal cost since they do not face competition. By charging higher prices, the monopolist may lose some customers, but the remaining customers will pay more, resulting in higher profits. Thus, a monopolist may be willing to lose customers in exchange for higher profits.

A Monopolist Is Willing to Lose Some Customers by Charging