question archive In detail: Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices
In detail: Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices
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In detail: Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits.
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Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits.
The statement is True.
However, it should be noted that the monopolist cannot set both price and quantity of output. The monopolist can choose one or the other. If the monopolist sets the price, then the market demand curve will determine the quantity. Conversely, if the monopolist chooses the quantity of output, then the market demand will determine the price that can be charged. Thus, the monopolist will choose the combination of quantity and price that maximizes profits.
