Question

In: Economics

A monopolist charges a price that is ________ and produces ________ than a perfect competitor. A....

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.

  • A. higher; less
  • B. lower; less
  • C. higher; more
  • D. lower; more

Solutions

Expert Solution

A. higher; less

A monopolist's marginal revenue curve is always below the demand curve and the price is higher than the marginal cost so a monopolist will charge higher and produces less than the perfect competitor

Basically, a firm will produce at the quantity at which MC = MR but will price the product at the cost when it is produced.

Look at the following graph

So a monopolist will produce at A and will charge the price at B.

Rahul Sunny answered 2 years ago
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