Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:
A) a higher price and produce a higher volume of output.
B) a lower price and produce a higher volume of output.
C) a lower price and produce a lower volume of output.
D) a higher price and produce a lower volume of output.
E) the same price and produce the same volume of output.

Question

Quizplus · Accepted Answer

A monopolist has the ability to control the market price by restricting output. In contrast, in a perfectly competitive industry, no individual firm can influence the price as they are price takers. Therefore, a monopolist with the same marginal cost and demand curve will charge a higher price and produce a lower volume of output compared to a perfectly competitive industry. This is because the monopolist wants to maximize its profits by charging a higher price and selling fewer units.

Compared to a Perfectly Competitive Industry, a Monopolist with the Same