**Monopoly vs. Pure Competition: An Economic Comparison**Given the same costs, the monopolist produces less output and charges a higher price compared to the purely competitive industry. **Key Questions:**1. **What makes this possible for the monopolist and not the purely competitive industry?**2. **What is the impact on the society of each?**In a monopoly, a single firm controls the entire market, allowing it to manipulate the price by adjusting the level of output. Due to the lack of competition, the monopolist can restrict supply to drive up prices without the risk of losing customers to competitors. This contrasts sharply with purely competitive industries, where many firms compete, leading to more output and lower prices as firms seek to attract consumers.**Impact on Society:**- **Monopoly:** - Higher prices and lower output can lead to consumer dissatisfaction due to limited choices and higher expenses. - Potential for efficiency loss or 'deadweight loss' in the economy, where the monopolist may not produce at an optimal output level. - **Purely Competitive Industry:** - More output at lower prices benefits consumers with more choices and lower costs. - Higher efficiency as firms operate at a more optimal production level, leading to a better allocation of resources.Understanding these differences helps students grasp the broader implications of market structures on both business operations and consumer welfare.

Answer to the question is as under:

Given the same costs, the monopolist produces less output and charges a higher price compared to the purely competitive industry What makes this possible for the monopolist and not the purely competitive industry? What is the impact on the society of each?

Given the same costs, the monopolist produces less output and charges a higher price compared to the purely competitive industry What makes this possible for the monopolist and not the purely competitive industry? What is the impact on the society of each?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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