In a monopoly market, the firm is the only supplier in the market, so other firms have no incentive to enter the market. However, profits may not always be positive due to various factors such as cost and pricing strategies. The demand facing the firm is downward-sloping because it is the market demand, which means that as the price increases, the quantity demanded decreases.

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A Monopoly Market

Question 5

Multiple Choice

a monopoly market,

A) other firms have no incentive to enter the market.
B) profits will always be positive because the firm is the only supplier in the market.
C) the demand facing the firm is downward-sloping because it is the market demand.
D) a and b
E) none of the above

Correct Answer: