An Important Difference Between Perfect Competition and a Monopoly Is

question 177

Multiple Choice

An important difference between perfect competition and a monopoly is that a monopoly

• A) faces a downward-sloping demand curve, while the perfect competitor faces a horizontal demand curve.
• B) faces an inelastic demand curve, while the perfect competitor faces an elastic demand curve.
• C) always earns economic profit, while a perfect competitor earns economic profit only sometimes.
• D) is not regulated by the market, while a perfect competitor is regulated by the market.

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Definitions:

Conversion Price

The predetermined price at which convertible securities can be converted into common stock.

Conversion Ratio

A ratio set at the time bonds are issued; determines the number of shares that can be exchanged for a bond.

Bond Rating

An evaluation made by credit rating agencies regarding the credit worthiness of a corporation's or government's debt issues, reflecting the likelihood of default.

Yield To Maturity

The total expected return on a bond if held to its maturity date, taking into account both interest payments and capital gains or losses.