An Important Difference Between a Perfectly Competitive Market and a Monopoly

question 55

Multiple Choice

An important difference between a perfectly competitive market and a monopoly is that:

• A) the demand curve facing a monopoly is horizontal, while the demand curve facing a competitive firm is upward sloping.
• B) a monopoly firm is a price taker, while a perfectly competitive firm is a price setter.
• C) a perfectly competitive firm makes supernormal profits, while a monopoly firm makes zero profits.
• D) market price is not equal to marginal cost in a monopoly, while for a perfectly competitive

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Definitions:

Non-directional

Pertains to hypothesis tests that do not specify a direction of difference or relationship, thus considering both possible outcomes.

Alternative Hypothesis

A statistical hypothesis that proposes a difference or effect, in contrast to the null hypothesis.

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