Which of the following is true about a monopoly?
A) A monopoly charges a higher price and produces a lower output level than if the market were competitive.
B) A monopoly is guaranteed an economic profit.
C) A monopoly charges the highest possible price.
D) A monopoly will shut down whenever losses are incurred.

Question

Quizplus · Accepted Answer

A monopoly has market power, which means it can raise the price above the competitive price and produce less than the competitive output level. This leads to lower consumer surplus and higher producer surplus for the monopolist.

Which of the Following Is True About a Monopoly