-In Exhibit K-5, which represents a monopoly, an economist would argue that
A) output is lower and price is higher than in perfect competition
B) product price should be set at $6
C) output should be 6 units from society's perspective
D) an output of 10 should be chosen by this monopolist
E) the monopolist's interests are compatible with society's

Question

-In Exhibit K-5, which represents a monopoly, an economist would argue that
A) output is lower and price is higher than in perfect competition 
B) product price should be set at $6 
C) output should be 6 units from society's perspective 
D) an output of 10 should be chosen by this monopolist 
E) the monopolist's interests are compatible with society's

Quizplus · Accepted Answer

In a monopoly, the output is typically lower and the price is higher compared to a perfectly competitive market because the monopolist maximizes profit where marginal cost equals marginal revenue, not where price equals marginal cost as in perfect competition.

-In Exhibit K-5, Which Represents a Monopoly, an Economist Would