A profit-maximizing monopoly's price is
A)the same as the price that would prevail if the industry was perfectly competitive.
B)less than the price that would prevail if the industry was perfectly competitive.
C)greater than the price that would prevail if the industry was perfectly competitive.
D)not consistently related to price that would prevail if the market was perfectly competitive.

Question

Quizplus · Accepted Answer

A profit-maximizing monopoly has market power, which allows it to charge a higher price than would prevail in a perfectly competitive market. The monopoly can limit output to increase the price, resulting in a greater profit than would be earned in a perfectly competitive market. Thus, the monopoly's price is greater than the price that would prevail in a perfectly competitive market.

A Profit-Maximizing Monopoly's Price Is