Which of the following is consistent with a monopoly?
A)A horizontal demand curve
B)The free entry of competitive firms
C)An increase in average total cost with increase in output
D)Marginal revenue that is less than the selling price
E)A single buyer

Question

Quizplus · Accepted Answer

In a monopoly, the marginal revenue is less than the selling price because the monopolist faces a downward-sloping demand curve. To sell additional units, the monopolist must lower the price, which affects the revenue generated from all units sold, not just the additional unit. This characteristic distinguishes monopolies from perfectly competitive markets, where marginal revenue equals the selling price.

Which of the Following Is Consistent with a Monopoly