The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-Identify the characteristics of a monopoly firm.
A)The existence of barriers to entry and production of a homogeneous product
B)The production of a unique product and a large number of sellers in the market
C)The production of a standardized product and the firm is a price taker
D)The existence of barriers to entry and the firm is a price taker
E)The existence of barriers to entry and the firm is a price maker

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-Identify the characteristics of a monopoly firm.
A)The existence of barriers to entry and production of a homogeneous product 
B)The production of a unique product and a large number of sellers in the market 
C)The production of a standardized product and the firm is a price taker 
D)The existence of barriers to entry and the firm is a price taker 
E)The existence of barriers to entry and the firm is a price maker

Quizplus · Accepted Answer

A monopoly firm is characterized by the presence of barriers to entry, which can include patents, economies of scale, and control over key resources. This allows the firm to have a significant degree of market power and act as a price maker, setting prices above the marginal cost of production. In contrast, a price taker is a firm that has no market power and must accept the market price. Therefore, choice E is the best option as it correctly identifies both characteristics of a monopoly firm.

The Figure Given Below Shows the Revenue and Cost Curves