If a monopoly is faced with competition from foreign multinational corporations or from potential new entrants, then it would probably
A)raise price and reduce output.
B)reduce price and raise output.
C)start operating at the inelastic portion of its demand curve.
D)increase production so that MR MC.

Question

If a monopoly is faced with competition from foreign multinational corporations or from potential new entrants, then it would probably
A)raise price and reduce output.
B)reduce price and raise output.
C)start operating at the inelastic portion of its demand curve.
D)increase production so that MR > MC.

Quizplus · Accepted Answer

When faced with competition, a monopoly would likely reduce price and raise output to maintain or increase its market share and stay competitive.

If a Monopoly Is Faced with Competition from Foreign Multinational