When the demand for a monopolist's output falls,the monopolist will
A)not change the price,since it has no competition.
B)raise the price in order to compensate for the lower demand.
C)charge a lower price.
D)cut its costs in order to maintain its profit margin.

Question

Quizplus · Accepted Answer

When the demand for a monopolist's output falls, the monopolist will choose to charge a lower price in order to stimulate demand and maintain its market power. This is because the monopolist has the ability to increase or decrease the price of its product without reducing its market power or profit. Additionally, raising the price in response to lower demand would likely result in further decreases in demand, which would ultimately hurt the monopolist's profits in the long run.

When the Demand for a Monopolist's Output Falls,the Monopolist Will