Question

If a monopolist raises its price,

a-it raises the barriers to entry.

b-the quantity demanded increases.

c-the quantity demanded remains the same.

d-the quantity demanded decreases.

Answer 1

Option D.

• A monopolist is a firm which is a sole producer in the whole market due to its ability to charge very high prices which prevents other firms from entering the market.
• A monopolist is considered as a price taker as it sells lower quantity at a very high price.
• But If a monopolist raises it's price, the quantity demanded decreases as people purchase lower units when Price's rise.
• Hence the revenue earned by the firm decreases when it charges higher prices.