When a Monopolist Reduces the Quantity of Output It Produces

question 361

Multiple Choice

When a monopolist reduces the quantity of output it produces and sells,

• A) the price of its output increases.
• B) the price of its output remains constant.
• C) the price of its output decreases.
• D) the profits for the firm always decrease.

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Definitions:

Economies Of Scale

Cost advantages that a business achieves due to the scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Differentiation

A strategy employed by businesses to distinguish their products or services from those of competitors, often through unique features, branding, or quality.

Competitive Strategies

Techniques and plans that a company adopts to attract customers, withstand competitive pressures, and strengthen an organization’s market position.

Competitive Edge

A distinct advantage that allows an organization to outperform its competitors.