Question

When a firm is able to become a monopoly:

A) it will tend to charge a higher price and produce a lower quantity than would a competitive market.

B) it will tend to charge a lower price and produce a higher quantity than would a competitive market.

C) it has to share the market with other firms, but gets to determine the price.

D) it will tend to charge a lower price and produce a lower quantity than would a competitive market.

Answer 1

A monopoly firm tends to charge a higher price and produce a lower quantity than in a competitive market.

Step-by-step explanation:

A monopoly firm, which is protected from competition by barriers to entry, will tend to charge a higher price and produce a lower quantity than would a competitive market.

A monopoly is not a price taker like a perfectly competitive firm; it has the power to determine the market price and quantity of output. The monopolist's total revenue will start low, rise, and then decline as it sells more units at a lower price.