One difference between a monopoly and a competitive firm is that
A) a monopoly is a price taker.
B) a monopoly maximizes profit by setting marginal revenue equal to marginal cost.
C) a monopoly faces a downward sloping demand curve.
D) None of the above.

Question

Quizplus · Accepted Answer

A competitive firm is a price taker and sets its price equal to the market price. On the other hand, a monopoly has market power and can set its own price, but it faces a downward sloping demand curve, meaning that it must lower its price to sell more units. A monopoly also does not necessarily maximize profit by setting marginal revenue equal to marginal cost as a competitive firm does.

One Difference Between a Monopoly and a Competitive Firm Is