An Important Difference Between a Perfectly Competitive Firm and a Monopolist

question 331

Multiple Choice

An important difference between a perfectly competitive firm and a monopolist is

• A) the size of the firms.
• B) the shape of the demand curve each faces.
• C) the goals of the owners of the firms.
• D) a monopolist normally produces a service, while a perfect competitor normally produces a good.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to efficient pricing and output levels.

Organic

Pertaining to or derived from living organisms, in food production referring to practices that do not use synthetic pesticides or fertilizers.

Profit

The profit achieved when the revenue generated from a business operation surpasses the expenses, costs, and taxes needed to maintain the operation.

External Effects

Also known as externalities, these are positive or negative consequences of economic activities experienced by unrelated third parties.