Which of the following is a characteristic of a monopoly but not of a competitive market? A) A monopoly contains many firms. B) price marginal cost C) price

Question

Which of the following is a characteristic of a monopoly but not of a competitive market?
A) A monopoly contains many firms.
B) price > marginal cost
C) price < marginal cost
D) price = marginal cost
E) A monopoly is a price-taker.

Quizplus · Accepted Answer

In a competitive market, price is generally determined by the forces of supply and demand, so price tends to equal marginal cost. However, a monopoly has market power and can set a price higher than its marginal cost. This is because there are no close substitutes for the product or service, giving the firm the ability to exert control over prices.

Which of the Following Is a Characteristic of a Monopoly