Which of the following is a characteristic of a single-price monopoly?
A) The firm is a price taker.
B) Demand is perfectly elastic.
C) There are many close substitutes for the firm's product.
D) Price exceeds marginal revenue.

Question

Quizplus · Accepted Answer

In a single-price monopoly, the firm has market power to set its own price as there are no close substitutes for its product. However, since it is the sole producer, it must lower the price to sell additional units of its product. This means that the marginal revenue earned from selling each additional unit is less than the price of that unit. Therefore, the price exceeds marginal revenue in a single-price monopoly.

Which of the Following Is a Characteristic of a Single-Price