An important difference between a perfectly competitive firm and a monopolist is
A) the size of the firms.
B) the shape of the demand curve each faces.
C) the goals of the owners of the firms.
D) a monopolist normally produces a service, while a perfect competitor normally produces a good.

Question

Quizplus · Accepted Answer

The shape of the demand curves each faces is an important difference between a perfectly competitive firm and a monopolist. A perfectly competitive firm faces a horizontal demand curve, meaning the firm has to accept the price set by the market. On the other hand, a monopolist faces a downward sloping demand curve, meaning it has the power to set prices to maximize profit.

An Important Difference Between a Perfectly Competitive Firm and a Monopolist