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Private ownership of a monopoly may benefit society because the monopoly will have an incentive to: a
Private ownership of a monopoly may benefit society because the monopoly will have an incentive to:
a. lower its costs to earn a higher profit.
b. price its good according to the intersection of marginal cost and average revenue.
c. charge a price that prevents some people from buying.
d. charge a price that is consistent with that of a benevolent social planner
Expert Solution
Option D
Private ownership of a monopoly may benefit society because the monopoly will have an incentive to charge a price that is consistent with that of a benevolent social planner. It is because a monopolist does not have any competition so there is no need to lower the prices in order to attract customers. The whole market is under control of monopolist hence a monopolist can charge a price at which no consumer avoids consuming the product produced by the monopolist.
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