The Main Difference Between a Monopoly and a Competitive Firm

question 18

Multiple Choice

The main difference between a monopoly and a competitive firm is that

• A)they have differently-shaped cost curves.
• B)a monopoly can change its output, whereas a competitive firm cannot.
• C)with a monopoly there is a market demand, whereas with a competitive firm there is only firm demand.
• D)a monopoly is not concerned with market price.
• E)a monopoly can affect market price, whereas a competitive firm cannot.

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Definitions:

Non-Value-Added Time

Time spent in production that does not directly add value to the product or service, often targeted for reduction in process improvement initiatives.

Balanced Scorecard

A strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.

Return on Investment (ROI)

An evaluation metric that assesses the effectiveness or financial gain of an investment by dividing the net earnings by the initial investment cost.

Residual Income

The net operating income that an investment center earns above the minimum required return on its operating assets.