Question 3 Which of the follow
Question 3
Which of the following is true about a monopoly?
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Its demand curve is generally less elastic than in morecompetitive markets. |
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It will always earn economic profit. |
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It will always be subject to government regulation. |
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It will always produce the same as a perfectly competitivefirm. |
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None of the above are true. |
Answer:
For Monopoly the demand curve is less elastic than thecompetitive markets because the Monopoly has a demand curvenegatively sloping and the competitive market demand curve ishorizontal of the elasticity of demand of perfectly competitivemarket is infinity why the Monopoly has some value very less thaninfinity because it is downward sloping curve and therefore thefirst statement is true
(a) is the answer
the second statement is wrong because if the fixed cost is veryhigh then the average total cost would be higher than the price asa result of which will not an economic profit and sometimesMonopoly is referred to as good for the society as a result ofwhich the government might or might not impose a regulation and itwill produce less than that of perfectly competitive firm becausethe price will be higher so that it can an positive profits
Therefore (b,c,d,e) is the answer to this question
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