Question

In order to sell more of its product, a monopolist must a. sell to the government. b. sell in international markets. c. lower its price. d. use its market power to force up the price of complementary products.

Answer 1

Answer: The correct answer is "c. lower its price."

Explanation: In this type of market, the monopoly company can determine the market price or the amount of production that maximizes its profits, but cannot determine the price or quantity at the same time, because, for example, if the company defines the price of sale, the demand will be the one that indicates the magnitude of the quantity to buy. But if the monopolist determines the quantity, the demand will determine the price at which it wishes to be acquired. In any case, the election of the monopolist is limited by market demand.

The price may go down if the monopolist tries to sell more.