Which of the following statements about a non-discriminating monopoly firm is correct?
A)It charges a price greater than its marginal cost.
B)Its high prices generate inflation.
C)It charges a price that maximizes its total revenues.
D)As a price setter,it can ignore market demand.
E)It has no incentive to produce each output level at the lowest possible cost.

Question

Quizplus · Accepted Answer

A non-discriminating monopoly firm charges a price greater than its marginal cost because there are no close substitutes for its product in the market, giving the firm the power to raise the price without losing many customers. This creates a deadweight loss in the market and reduces overall economic efficiency.

Which of the Following Statements About a Non-Discriminating Monopoly Firm