The main difference between the price-quantity graph of a perfectly competitive firm and a monopoly is
A)that the competitive firm's demand curve is horizontal,while that of the monopoly is downward sloping.
B)that a monopoly always earns an economic profit while a competitive company always earns only normal profit.
C)that a monopoly maximizes its profit when marginal revenue is greater than marginal cost.
D)that a monopoly does not incur increasing marginal cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the demand curve for an individual firm is perfectly elastic or horizontal because they are price takers. In contrast, a monopoly has downward sloping demand curve because they have market power to set prices.

The Main Difference Between the Price-Quantity Graph of a Perfectly