The authors claim that monopolists will tend to practice stronger conservation of depletable resources than would occur under a perfectly competitive market structure. Why is this true?

A) Monopolists are typically taxed at higher rates than competitive firms, so they will tend to reduce output and revenues in order to minimize their tax expenditures.
B) The profit-maximizing decisions of a monopolist tend to generate lower output levels than under perfect competition, so the resource is depleted at a slower rate by the monopolist.
C) Common property resource problems do not arise when there is only one seller.
D) The lower depletion rate used by monopolists serves as a barrier to entry.

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stephanie ortiz · Accepted Answer

Final Answer : B, Explanation :  Monopolists tend to generate lower output levels than under perfect competition, so the resource is depleted at a slower rate by the monopolist. This is because a monopolist can charge a higher price for their product, so they don't need to extract as much of the resource to make a profit. The conservation of the resource serves as a long-term strategy for the monopolist to maintain their market power and profitability.

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