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

-Why does a monopolist face the market demand curve?
A)Presence of a large number of substitutes
B)Presence of a large number of buyers in the market
C)Barred entry of any new firm in the market
D)Produces a homogeneous product
E)Consumers have perfect knowledge of the market

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
 
-Why does a monopolist face the market demand curve?
A)Presence of a large number of substitutes 
B)Presence of a large number of buyers in the market 
C)Barred entry of any new firm in the market 
D)Produces a homogeneous product 
E)Consumers have perfect knowledge of the market

Quizplus · Accepted Answer

A monopolist faces the market demand curve because they are the only seller in the market with no close substitutes and there are barriers to entry that prevent new firms from entering and competing. This gives the monopolist the power to set prices and control the quantity of output supplied.

The Figure Given Below Shows the Revenue and Cost Curves