Question

In contrast with a firm in a competitive market, a monopoly is able to control a....

In contrast with a firm in a competitive market, a monopoly is able to control

a. input costs

b. price

c. profits

d. demand

e. all aspects of its operation

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Homework Answers

Answer #1

Option b

Price

A monopoly is only one firm in the market, so it has power over price as the firm faces the market demand curve and a market demand curve is downward sloping. It means the firm can sell at a higher price by reducing output.

A perfectly competitive firm is a price taker, and it can sell as much as possible at that price if it increases price there will be no sale, and if it decreases price there will be a loss as the market has perfect information with all stakeholders.

the cost, profit and demand aspect are same for both.

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