Asked by Ankush Aggarwal on Jun 07, 2024
Verified
A monopoly firm is different from a perfectly competitive firm in that
A) there are many substitutes for the monopolist's product,whereas there are no close substitutes for the perfectly competitive firm's product.
B) the monopolist's demand curve is perfectly inelastic,whereas the perfectly competitive firm's demand curve is perfectly elastic.
C) the monopolist can influence price in the market,whereas the perfectly competitive firm is a price taker.
D) All of these choices are true.
Perfectly Competitive Firm
A theoretical concept where a company operates in a market where there are many buyers and sellers, all selling homogeneous products, with no barriers to entry or exit.
Monopolist's Product
A product that has no close substitutes, making the seller the sole provider and able to control market prices.
Price Taker
An entity (often a company or individual) that has no control to dictate prices for goods or services in the market and must accept the prevailing market price.
- Acquire knowledge of the primary features and configurations of monopolies.
- Determine the distinctive factors between monopolies and perfectly competitive market structures.
Verified Answer
DM
Dominique MarieJun 12, 2024
Final Answer :
C
Explanation :
A monopoly firm can influence price in the market because it is the sole producer of the product, while a perfectly competitive firm is a price taker because it has no control over the price and must accept the market price. Choice A is incorrect because a monopoly firm typically does not have close substitutes, which is why it has market power, while a perfectly competitive firm has many close substitutes. Choice B is incorrect because the demand curve for a monopoly firm is downward sloping, but not perfectly inelastic, while the demand curve for a perfectly competitive firm is perfectly elastic.
Learning Objectives
- Acquire knowledge of the primary features and configurations of monopolies.
- Determine the distinctive factors between monopolies and perfectly competitive market structures.