An important difference between perfect competition and a monopoly is that a monopoly
A) faces a downward-sloping demand curve, while the perfect competitor faces a horizontal demand curve.
B) faces an inelastic demand curve, while the perfect competitor faces an elastic demand curve.
C) always earns economic profit, while a perfect competitor earns economic profit only sometimes.
D) is not regulated by the market, while a perfect competitor is regulated by the market.

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers with a horizontal demand curve, indicating that they can sell any quantity at the market price. A monopoly, however, faces the market demand curve, which is downward sloping, meaning it can set its price above marginal cost.

An Important Difference Between Perfect Competition and a Monopoly Is