Monopoly firms can employ their market power to charge a price that is:

Question

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Monopoly firms have the ability to charge a price higher than their marginal cost because they do not face competition. They can use their market power to set a higher price and restrict output to maximize their profits. However, the price they charge is likely to be below the maximum that consumers are willing to pay, as charging too high a price would lead to a substantial decrease in demand.

Monopoly Firms Can Employ Their Market Power to Charge a Price