A monopoly is likely to _______ and _______ than otherwise equivalent competitive firms.
A) produce more; charge more
B) produce less; charge more
C) produce more; charge less
D) produce less; charge less

Question

Quizplus · Accepted Answer

A monopoly has no competition, which means that it has the power to control the supply and price of its product or service. The lack of competition removes the pressure to produce more in order to meet market demand, so monopolies tend to produce less than competitive firms. Additionally, because there are no other options for consumers, a monopoly can charge higher prices without fear of losing customers to competitors. Thus, monopolies tend to charge higher prices than otherwise equivalent competitive firms.

A Monopoly Is Likely to _______ and _______ Than Otherwise

A Monopoly Is Likely to _ and _ Than Otherwise