A Monopoly

question 528

Multiple Choice

A monopoly

• A)can set the price it charges for its output and earn unlimited profits.
• B)takes the market price as given and earns small but positive profits.
• C)can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
• D)can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

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Definitions:

Price Takers

Entities in a market that accept prevailing prices for goods or services, lacking the market power to influence prices on their own.

Market

An abstract concept encompassing the forces of demand and supply and the interaction of buyers and sellers with the potential for exchange to occur.

Business

The organized activities and operations of individuals or entities to produce and sell goods and services for profit.

Price-Taker Firms

Companies that accept the market price as given and have no influence to change the price of the goods or services they sell.