If a Perfectly Competitive Industry Is Taken Over by a Monopolist

question 52

Multiple Choice

If a perfectly competitive industry is taken over by a monopolist,

• A)output will always rise
• B)output will always fall
• C)market price will probably not change
• D)marginal cost will approach average variable cost in the long run
• E)market price could fall if there are large gains from technological changes under monopoly

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Definitions:

Perfectly Price Elastic

A market situation in which demand or supply responds infinitely to changes in price, meaning any tiny price change results in an infinite quantity demanded or supplied.

Demand

The quantity of a good or service consumers are willing and able to purchase at various prices during a given period.

Tickets

Documents or electronic vouchers that grant the holder the right to admission to an event, transport service, or the like.

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in its price.