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.
Question
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.
Solution
The main difference between a monopoly firm and a competitive firm is that a monopolist can influence market price while a competitive firm cannot.
Here's why:
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In a monopoly, there is only one firm that controls the entire market. This firm has the power to set the price of its product because there are no close substitutes available. Consumers have no choice but to buy from the monopolist if they want the product.
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In a competitive market, on the other hand, there are many firms selling the same or similar products. Each firm is a price taker, meaning it must accept the market price as given. If a firm tries to charge a higher price, consumers will simply buy from another firm.
The other options mentioned in the question are not accurate:
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There are not necessarily many substitutes for a monopolist's product. In fact, the lack of substitutes is often what allows a firm to become a monopolist in the first place.
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A monopolist's demand curve is not perfectly inelastic. While a monopolist can set its own price, it is still subject to the law of demand: if it sets the price too high, quantity demanded will decrease.
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Both monopolists and competitive firms can have U-shaped average cost curves. This shape of the curve reflects economies and diseconomies of scale, which can occur in any type of market structure.
Similar Questions
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Multiple Choice QuestionA monopolistic competitor's demand curve is Blank______.Multiple choice question.perfectly elastic as is demand for firms in pure competition.less elastic than that of a pure monopoly but more elastic than that of a firm in pure competitionmore elastic than that of a pure monopoly but less elastic than that of a firm in pure competitionmore elastic than that of a pure monopoly and as elastic as demand for firms in pure competitionas elastic as demand for pure monopolies but less elastic than that of a firm in pure competition
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