When Comparing a Monopoly with a Competitive Industry, Monopoly Quantity

question 214

Multiple Choice

When comparing a monopoly with a competitive industry, monopoly quantity:

• A) and monopoly price will be lower than that of a competitive firm.
• B) will be higher, and monopoly price will be lower, than that of a competitive firm.
• C) will be lower, and monopoly price will be higher, than that of a competitive firm.
• D) and monopoly price will be higher than that of a competitive firm.

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Definitions:

Economies of Scale

Describe the cost advantages that enterprises obtain due to the scale of their operations, typically resulting in reduced costs per unit with increased output.

Long-run Average Total Cost

The average cost per unit of output when all inputs, even physical capital, are adjustable, over a sufficient time period.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, characterized by a reduction in average cost per unit when output is increased.

Diseconomies of Scale

The phenomenon where production costs per unit increase as the volume of output increases.