A Monopoly Firm Is Different from a Competitive Firm in That

question 77

Multiple Choice

A monopoly firm is different from a competitive firm in that:

• A) there are many substitutes for a monopolist's product whereas there are no substitutes for a competitive firm's product.
• B) a monopolist's demand curve is perfectly inelastic whereas a competitive firm's demand curve is perfectly elastic.
• C) a monopolist can influence market price whereas a competitive firm cannot.
• D) a competitive firm has a U-shaped average cost curve whereas a monopolist does not.

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Definitions:

Restocking Quantity

The quantity of inventory ordered to replenish stock levels to a predetermined amount.

Inventory Costs

The costs associated with storing, managing, and financing a company's inventory, including such things as warehousing and insurance.

Shortage Cost

Costs incurred when demand exceeds supply, including opportunity costs of not meeting customer demand and potential loss of sales.

Carrying Cost

The full expenditure of keeping stock on hand, covering expenses related to storing, managing, value reduction, and the cost of alternative opportunities forgone.