A Big Difference Between a Competitive Firm and a Monopolist

question 27

Multiple Choice

A big difference between a competitive firm and a monopolist is that a monopolist

• A) does not charge a price equal to marginal revenue.
• B) does not set marginal revenue equal to marginal cost to maximize profits.
• C) does not try to maximize profits.
• D) can always make positive economic profits.
• E) cannot set its price at the market price.

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Definitions:

Inventory Investment

The net change in physical inventory levels for businesses over a certain period, indicating how much companies are spending to stock goods.

Inventory

The complete quantity of products and materials kept in inventory by a company, meant for sale or to be used in manufacturing.

Interest Rate

The piece of a loan that accumulates interest for the borrower, often specified as a yearly percentage of the loan's existing outstanding balance.

Marginal Efficiency

Marginal efficiency refers to the rate of return or profit expected from an additional unit of investment.