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JAMB Economics 1989 Question 15

Question 15

Market Structures

In order to increase its profit margin, the monopolist can manipulate

  1. A.both price and output
  2. B.either price or output
  3. C.only its price
  4. D.only its output.
Show the answer and explanation

Answer: B (either price or output)

Explanation

A monopolist faces the market demand curve, so it can set the price or the output, but not both: once one is chosen, demand fixes the other.