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CIMAPRA17-BA1-1 Exam - Topic 4 Question 128 Discussion

Why do monopoly market structures charge higher prices than would be charged by more competitive market structures?
C) They can increase profits by reducing output to force prices higher
A) They are more likely to suffer from diseconomies of scale
B) They must recover their higher research and development expenditures
D) They have barriers to entry that stop customers going to new markets

CIMAPRA17-BA1-1 Exam - Topic 4 Question 128 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam
Question #: 128
Topic #: 4
[All CIMAPRA17-BA1-1 Questions]

Why do monopoly market structures charge higher prices than would be charged by more competitive market structures?

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Suggested Answer: C

by Justine at Jun 18, 2026, 05:57 AM

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Cheryl
16 days ago
B makes sense too. They need to cover R&D costs, which can be high.
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Lizette
21 days ago
I lean towards D. Barriers keep competition away, allowing higher prices.
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Matthew
26 days ago
I think C is the best answer. Monopolies limit output to raise prices.
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Donette
1 month ago
Barriers to entry are a huge factor, no doubt!
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Valentine
1 month ago
Higher R&D costs definitely play a role too.
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Tina
1 month ago
Really? I thought competition would keep prices in check.
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Hassie
2 months ago
Totally agree, they control the supply!
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Sabina
2 months ago
Monopolies can restrict output to raise prices.
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Blythe
2 months ago
I lean towards option C because it seems logical that reducing output would lead to higher prices, but I’m not completely confident about the other options.
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Alyce
2 months ago
I’m a bit confused about the relationship between R&D costs and pricing. Isn’t it possible that those costs could be spread out in a competitive market too?
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Larae
2 months ago
I feel like this question is similar to one we practiced about barriers to entry. I think option D might be the right answer since monopolies can keep competitors out.
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Samuel
2 months ago
I think I remember that monopolies can set prices higher because they control the supply, but I'm not sure if that's the same as reducing output.
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