The fundamental constraint on a monopoly firm's exercise of market power is
A) government regulation.
B) market demand.
C) diseconomies of scale.
D) decreasing marginal revenue.

Question

Quizplus · Accepted Answer

The fundamental constraint on a monopoly firm's exercise of market power is market demand. This is because a monopoly's ability to set prices and output levels is ultimately limited by the willingness of consumers to pay for its product at various prices.

The Fundamental Constraint on a Monopoly Firm's Exercise of Market