Given similar market conditions, we would expect a monopolist to:
A) charge a higher price and produce a lower output than under perfect competition.
B) charge a lower price and produce a lower output than under perfect competition.
C) charge a higher price and produce a higher output than under perfect competition.
D) charge the same price and produce the same output as in perfect competition.

Question

Quizplus · Accepted Answer

A monopolist has market power, which means it can charge a higher price than under perfect competition. Additionally, because the monopolist is the only supplier in the market, it can restrict output to raise the price and increase profits. Therefore, it is expected that a monopolist would charge a higher price and produce a lower output than under perfect competition.

Given Similar Market Conditions, We Would Expect a Monopolist To