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Posted: October 7th, 2023
Monopolist economic questions
Question description
(1.) Assume that all firms want to maximize profits, and that the price mechanism is allowed to freely fluctuate based upon market supply and demand. Appraise this statement: A monopolist will charge a lower price and produce a higher quantity of a good than would be the case if the industry were more competitive, and will result in an increase in efficiency and in an increase in social welfare that would be true if the industry were more competitive. HINT: Include concepts of consumer surplus, producer surplus and deadweight loss in your answer.
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