A monopolist produces:

(a) less than the socially efficient quantity of output and at a lower price than in a competitive market.

(b) less than the socially efficient quantity of output and at a higher price than in a competitive market.

(c) more than the socially efficient quantity of output and at a higher price than in a competitive market.

(d) the socially efficient quantity of output and at a higher price than in a competitive market.

The correct answer is (b) less than the socially efficient quantity of output and at a higher price than in a competitive market.

In a monopoly, the producer will charge a higher price than in a competitive market. That is to say, a monopolistic firm will price its good above the marginal cost whereas a perfectly competitive firm would price it at the marginal cost level. Additionally, the socially efficient quantity is the output level at which the marginal cost intersects with the demand. In a monopoly, this does not occur, since the profit-maximizing output, where marginal revenue equals marginal cost, is so much lower than the output that could be produced at the intersection of the marginal cost and demand curve. Therefore, a monopolist produces an output level below the socially efficient quantity and prices its product at a higher price than a perfectly competitive firm. The only option that gives us this scenario is option (b).