A significant difference between monopoly and perfect competition is that: Group of answer choicesfree entry and exit is possible in a monopolized industry but impossible in a competitive industry.competitive firms control market supply but monopolies do not.the monopolist's demand curve is the industry demand curve while the competitive firm's demand curve is perfectly elastic.profits are driven to zero in a monopolized industry but may be positive in a competitive industry.
Question
A significant difference between monopoly and perfect competition is that: Group of answer choicesfree entry and exit is possible in a monopolized industry but impossible in a competitive industry.competitive firms control market supply but monopolies do not.the monopolist's demand curve is the industry demand curve while the competitive firm's demand curve is perfectly elastic.profits are driven to zero in a monopolized industry but may be positive in a competitive industry.
Solution
The significant difference between monopoly and perfect competition is that the monopolist's demand curve is the industry demand curve while the competitive firm's demand curve is perfectly elastic.
Here's why:
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In a monopoly, there is only one firm that controls the entire market. This means that the demand curve for the monopolist is the same as the industry demand curve. The monopolist can set the price and quantity of the product in the market.
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In perfect competition, there are many firms selling identical products. Therefore, each firm is a price taker, meaning they must accept the market price. This results in a perfectly elastic demand curve for each firm. They can sell as much as they want at the market price, but they cannot influence the price by changing their quantity.
The other options are incorrect. Free entry and exit are possible in both monopolized and competitive industries, although it may be more difficult in a monopolized industry due to barriers to entry. Competitive firms do not control market supply; instead, market supply is determined by all firms in the market. Profits can be positive or zero in both monopolized and competitive industries, depending on various factors such as cost structures and market conditions.
Similar Questions
Perfect competition and monopolistic competition are similar in that both market structures include A. price-taking behaviour by firms. B. a homogeneous product. C. no barriers to entry. D. very few firm
A monopoly firm is different from a competitive firm in that: Group of answer choicesthere are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product.a monopolist's demand curve is perfectly inelastic while a competitive firm's demand curve is perfectly elastic.a monopolist can influence market price while a competitive firm cannot.a competitive firm has a U-shaped average cost curve while a monopolist does not.
What is the main difference between a monopoly and a perfect competition?a.The source of market powerb.The number of firms in the marketc.The presence of government regulationd.The degree of product differentiation
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The main differences between a competitive firm and a monopoly are:(i) competitive firms do not have to worry about the price effect lowering their total revenue(ii) marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is lessthan the price it is able to charge(iii) monopolies must lower their price in order to sell more of their product, while competitive firmsdo no
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