The ultimate market constraint on the exercise of market power
A)Is the demand curve facing the monopolist.
B)Is marginal cost pricing.
C)Is the ATC curve facing the monopolist.

Question

Quizplus · Accepted Answer

The demand curve facing the monopolist is the ultimate market constraint on the exercise of market power because it represents the maximum price that customers are willing to pay for a product. If the monopolist sets its price too high, it will lose customers to competitors' substitutes or to other goods or services. Therefore, the monopolist must consider the demand curve when setting prices in order to maximize profits.

The Ultimate Market Constraint on the Exercise of Market Power