In a monopoly, prices tend to be _____ than the competitive price, and in a monopsony, prices tend to be:
A) lower; higher.
B) higher; higher.
C) higher; lower.
D) lower; lower.

Question

Quizplus · Accepted Answer

In a monopoly, where a single firm controls the market, prices tend to be higher than in a competitive market because the monopolist can restrict output to raise prices. In a monopsony, where there is only one buyer and many sellers, the buyer has the power to push prices down, resulting in lower prices than in a competitive market.

In a Monopoly, Prices Tend to Be _____ Than the Competitive