Chapter 77, Problem 4MCQ

To determine

What monopolist will produce and charge without government intervention?

Answer to Problem 4MCQ

From the available options, the correct option is ${\text{Q}}_{\text{2}}$, ${\text{P}}_{\text{1}}$.

Explanation of Solution

From the data on the graph, the monopolist will produce the quantity at the point of Q2 and charge the price at point P1 because, without government intervention, the monopolist will charge the higher price in the market.

Therefore, the correct option is c (${\text{Q}}_{\text{2}}$, ${\text{P}}_{\text{1}}$) and all other options are incorrect as they consider a lower price.

Economics Concept Introduction

Introduction: A monopoly that involves high start-up costs and barriers to entry and provides the largest supplier in any industry is called a natural monopoly because it covers powerful economies of scale to conduct the business. A person who has a monopoly on the business is called a monopolist.