CFA Practice Question
Suppose that all of the fast-food restaurants in the entire world are purchased by one firm. Relative to the current (competitive) price and quantity (and assuming that nothing else has changed), we would expect the monopolist to sell ______
A. more and charge less.
B. more and charge more.
C. less and charge more.
Explanation: Relative to perfectly competitive industries, monopolies will restrict output, allowing them to charge a higher price and make a profit. This results in a net loss of benefits to society.
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