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Questions and Answers
What is the key characteristic of a monopoly?
What is the key characteristic of a monopoly?
- Multiple sellers with similar products
- A single seller dominates the market with no close substitute (correct)
- Many sellers with identical products
- A few sellers with slightly different products
What creates market power for a monopoly?
What creates market power for a monopoly?
- High number of competitors
- Barriers to entry (correct)
- Frequent price changes
- Low market share
How does a monopoly maximize profit?
How does a monopoly maximize profit?
- By producing at the lowest possible cost
- By equating Marginal Revenue (MR) to Marginal Cost (MC) (correct)
- By producing at the highest possible cost
- By setting prices higher than Marginal Cost (MC)
What happens to the demand curve in a monopoly?
What happens to the demand curve in a monopoly?
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What is the significance of Marginal Revenue (MR) in a monopoly?
What is the significance of Marginal Revenue (MR) in a monopoly?
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