Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?
A) A monopoly contains many firms.
B) A monopoly produces an efficient level of output.
C) A producer in a monopoly may earn long-run economic profits.
D) A producer in a monopoly has no market power.
E) A producer in a monopoly is a price taker.

Question

Quizplus · Accepted Answer

In a competitive market, there are many firms competing with each other, which results in low barriers to entry and no firm has the ability to set the price. In contrast, a monopolist has control over the price it charges as it is the only seller in the market. This gives the monopolist market power, which allows them to earn long-term economic profits. Therefore, earning long-run economic profits is a characteristic of a monopoly, but not a competitive market.

Which of the Following Is a Characteristic of a Monopoly