A monopolist has market power because it

Question

Quizplus · Accepted Answer

A monopolist has market power because it faces a downward-sloping demand curve for its own output, meaning that it can increase its price without losing all of its customers. This is in contrast to a perfectly competitive market where firms are price takers and cannot raise their price without losing customers. Option B is incorrect as a monopolist cannot raise price as much as it wishes without losing some customers, as there is still a limit to how much consumers are willing to pay. Option C is also incorrect as a monopolist is not a price taker, as it has the ability to set its own price based on its market power.

A Monopolist Has Market Power Because It