question archive Compared to a single-price monopoly, the output of a perfectly competitive industry with the same costs A
Compared to a single-price monopoly, the output of a perfectly competitive industry with the same costs A
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Compared to a single-price monopoly, the output of a perfectly competitive industry with the same costs
A. is more than the monopoly's output.
B. is less than the monopoly's output.
C. could be more than, less than, or equal to the monopoly's output.
D. is the same as the monopoly's output.
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Answer: A
A monopolist earns positive economic profit by purposefully limiting supply which decreases output and increases prices. In a perfectly competitive market this doesn't happen and total surplus is maximized. Thus, output is higher in a perfectly competitive market than a monopoly.
