One problem associated with a monopoly firm is that it
A) produces too little output but also charges a low price.
B) produces too much output and charges too low a price.
C) restricts output and charges a relatively higher price than a purely competitive firm.
D) is just as good as a purely competitive firm in terms of output and price.

Question

Quizplus · Accepted Answer

Monopoly firms have the power to restrict output and charge higher prices than would exist in a competitive market. This is because they are the sole producer of a product or service and there are no close substitutes available to consumers. As a result, consumers have no choice but to pay the higher price, and the monopolist earns higher profits by limiting quantity.

One Problem Associated with a Monopoly Firm Is That It