Final answer:
If Leland was not a monopoly but a part of a competitive market, the price for Breathe Deep would have decreased and the output would have increased due to the competitive market dynamics of supply and demand determining the market price.
Step-by-step explanation:
If Leland were not a monopoly and faced competition, the market scenario would be different. Given the same demand curve, if there was perfect competition instead of monopoly, the price and output of a product would align with the competitive market equilibrium. Thus, the correct answer is b) The price would have decreased, and the output would have increased.
Under perfect competition, firms are price takers and can only charge at the market price, which is determined by the intersection of supply and demand. If Leland was not a monopoly but instead one of many firms in a perfectly competitive market, it would produce where marginal cost (MC) equals marginal revenue (MR), which is also equal to the price in such markets.
This typically results in a lower price and higher output compared to a monopoly, where the monopolist sets a higher price and produces a lower quantity to maximize profits.
To reflect this in economic theory, if Leland were operating in a competitive market and observed an increase in demand, they would increase production to meet the new demand and the new equilibrium price would likely be lower than before, allowing for more output to be sold.