Suppose potatoes were produced in Canada by many, many firms in perfect competition. In Belgium, only one firm produces potatoes for the Belgium market. Suppose as well that for the competitive firms and the monopoly, minimum ATC is the same. We would expect then, that in Belgium the price of potatoes is _____________ and ____________potatoes are produced and sold than in Canada.
A) higher; more
B) lower; more
C) higher; fewer
D) lower; fewer
E) the same; fewer

Question

Quizplus · Accepted Answer

In a monopoly, prices tend to be higher due to the lack of competition, and output is lower because the monopolist can restrict supply to increase prices.

Suppose Potatoes Were Produced in Canada by Many, Many Firms