Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's
A) price, output, and average total cost would all be higher.
B) price and average total cost would be higher, but output would be lower.
C) price, output, and average total cost would all be lower.
D) price and output would be lower, but average total cost would be higher.

Question

Quizplus · Accepted Answer

Compared to a purely competitive firm, a pure monopolist will produce less output and charge a higher price, as they have market power. However, their costs will be the same. Therefore, in long-run equilibrium, the monopolist's price and average total cost will be higher, but their output will be lower.

Comparing a Pure Monopoly and a Purely Competitive Firm with Identical