Compared to a perfectly competitive firm, a monopolist
A)is less likely to advertise.
B)will, according to Schumpeter, invest fewer resources in research and development.
C)usually produces an inefficiently small level of output.
D)is less likely to face government regulation.

Question

Quizplus · Accepted Answer

A monopolist usually produces an inefficiently small level of output because they have the power to restrict output and raise prices, which results in a lower level of consumer surplus and deadweight loss to society. This is in contrast to a perfectly competitive firm, which produces at the efficient level of output where marginal cost equals price.

Compared to a Perfectly Competitive Firm, a Monopolist