Monopolization of a competitive industry to become a cartel will (assuming technology is fixed) lead toSelect an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.alower prices and higher output.bhigher prices and the same level of output.clower output and the same level of price.dhigher prices and lower output.ehigher output and higher prices.
Question
Monopolization of a competitive industry to become a cartel will (assuming technology is fixed) lead toSelect an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.alower prices and higher output.bhigher prices and the same level of output.clower output and the same level of price.dhigher prices and lower output.ehigher output and higher prices.
Solution
The correct answer is d. higher prices and lower output.
Here's why:
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When a competitive industry becomes a monopoly or a cartel, the single producer or group of producers now controls the entire supply of the product or service.
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This control over supply allows the monopoly or cartel to set prices at a higher level than would be possible in a competitive market, where competition tends to drive prices down.
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At the same time, the monopoly or cartel has less incentive to produce as much of the product or service as would be produced in a competitive market. This is because they can maintain high prices even with lower output.
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Therefore, the monopolization of a competitive industry (assuming technology is fixed) will lead to higher prices and lower output.
Similar Questions
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A monopoly will engage in price discrimination, if it can, in order to increase profits by doing which of the following?Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aBy selling more of its goodsbBy reducing costs for some of its productscBy continuing to produce the same amountdBy increasing prices for all consumers and producing less
If a monopoly is producing where price is greater than average cost (and thus making a profit), more firms will enter the market.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aTruebFalse
Since it faces no competitors, a monopolist always makes a positive economic profit.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aTruebFalse
Markets of perfectly competitive firms and monopolies both _________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.ahave barriers to entrybhave downward sloping demand curvescare easy to enter and exit
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