One difference between a monopoly and a competitive firm is that A. a monopoly faces a downward sloping demand curve. B. a monopoly is a price taker. C. a monopoly maximizes profit by setting marginal revenue equal to marginal cost. D. None of the above.

Question

Business

Christian Merritt

3 July, 11:56

One difference between a monopoly and a competitive firm is that A. a monopoly faces a downward sloping demand curve. B. a monopoly is a price taker. C. a monopoly maximizes profit by setting marginal revenue equal to marginal cost. D. None of the above.

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Answers (1)

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Armani Bowman · Answer 1

A. a monopoly faces a downward sloping demand curve.

Explanation:

In business, it is seen to occur because they have no competition, monopolists have no incentive to improve their products. A lot of their focus is instead placed on maintaining monopolistic conditions through bribing their way and other tactics that dissuade competitors from entering the market.

Demand curve slopes downward, this is said to decreases with each unit of production beyond the profit maximizing quantity and in the eyes of the monopolist, cash is lost with each additional unit been produced, causing marginal cost exceeds marginal revenue. This causes the restricted output and higher costs that characterize products produced by monopolists.

Because the demand curve slopes downward, marginal revenue decreases with each unit of production beyond the profit maximizing quantity. Thus, the monopolist loses money with each additional unit produced, as marginal cost exceeds marginal revenue.