Relative to a competitively organized industry a monopoly ?
Correct answer: A. Produces less output, charges higher prices and earns economic profits.
- A. Produces less output, charges higher prices and earns economic profits.
- B. Produces less output, charges lower prices and earns only a normal profit
- C. produces more output, charges higher prices and earns economics profits
- D. produces less output, charges lower prices and earns economic profits
Explanation
Compared with perfect competition, a monopoly restricts output and charges a higher price because it faces the market demand curve. Its market power can produce economic profit, unlike the normal-profit outcome of long-run perfect competition.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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