A monopoly will always charge the highest price that consumers will bear and thus realize an economic profit.

Question

Quizplus · Accepted Answer

While a monopoly has the power to set prices higher than in competitive markets, it does not always charge the highest possible price. The optimal price is determined by the demand curve, aiming to maximize profits, which involves balancing higher prices against the quantity of sales. Charging the highest price consumers will bear could reduce the quantity sold too much, lowering profits.

A Monopoly Will Always Charge the Highest Price That Consumers