ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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competing firms
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market equilibrium
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perfect competition
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the monopoly
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Detailed explanation-1: -A monopoly price is set by a monopoly. A monopoly occurs when a firm lacks any viable competition and is the sole producer of the industry’s product. Because a monopoly faces no competition, it has absolute market power and can set a price above the firm’s marginal cost.
Detailed explanation-2: -A monopolist can determine its profit-maximizing price and quantity by analyzing the marginal revenue and marginal costs of producing an extra unit. If the marginal revenue exceeds the marginal cost, then the firm should produce the extra unit.
Detailed explanation-3: -Understanding a Monopoly A monopoly is a business that is characterized by a lack of competition within a market and unavailable substitutes for its product. Monopolies can dictate price changes and create barriers for competitors to enter the marketplace.