Question

A monopolist that chooses price (A) necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing. (B) produces the same amount as a monopolist that chooses quantity. (C) produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing. (D) could produce more or less than a monopolist that chooses quantity depending on the demand curve.

Answer 1

Answer:

B) produces the same amount as a monopolist that chooses quantity.

Explanation:

A monopolist is a business that is the only supplier of a good or service within a market. The monopolist should maximize its profit by setting the selling price (marginal revenue) equal to it marginal costs.

Monopolists have the capacity to earn economic profit because they can charge a higher than equilibrium price and produce less output. Since monopolists have huge market power, they are able to set the quantity supplied and the price of their goods, but that doesn't mean that they will maximize their profits while doing so.