Question

Which of the following statements is true? ​A firm that has monopoly power is a price...

Which of the following statements is true?

​A firm that has monopoly power is a price taker.
​A firm that has monopoly power has a perfectly inelastic demand curve.
​A firm that has monopoly power is a price maker.
​A firm that has monopoly power has a perfectly elastic demand curve.
​A firm that has monopoly power earns exorbitant profits.

Homework Answers

Answer #1

Answer- The correct answer is that MONOPOLY IS A PRICE MAKER.Monopoly is a market structure where there is only one seller selling goods or services that are not sold by any other seller and is not a price taker, a monopolist is a price maker. Also, the demand curve of monopoly is downward sloping and not perfectly elastic or perfectly inelastic. Due to the application of law of demand the demand curve is downward sloping. Also a monopolist is a sole seller of the goods and services and maximises his profits. In monopoly there are high barriers to entry.

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