An important difference between perfect competition and monopoly is
A) a monopoly is profitable and a perfect competitor is not.
B) the monopoly faces a downward sloping demand curve and the perfect competitor faces a horizontal demand curve.
C) the monopoly faces an inelastic demand curve and the perfect competitor faces an elastic demand curve.
D) a monopoly is not regulated by the market, while a perfect competitor is regulated by the market.

Question

Quizplus · Accepted Answer

The key difference between perfect competition and monopoly is the shape of the demand curve faced by the firm. A monopoly faces a downward sloping demand curve because it is the only supplier in the market, meaning that it has some control over the price of its product. On the other hand, a perfectly competitive firm faces a horizontal demand curve because it is a price-taker, meaning that it has no control over the price and must accept the market price.

An Important Difference Between Perfect Competition and Monopoly Is