A major difference between a monopoly and a perfectly competitive firm is that a monopoly (a)...

A major difference between a monopoly and a perfectly competitive firm is that a monopoly

(a) takes into account decision making by other firms.

(b) faces a downward sloping demand.

(d) faces competition from close substitutes to its product.

Solutions

Expert Solution

Answer: (b) faces a download sloping demand.

Explanation:

Perfect competition is a market structure where large number of sellers sells homogeneous product. In this market form demand for the commodity is perfectly elastic, as large number of sellers sells homogeneous product. Hence demand curve is horizontal straight line.

Monopoly is a market structure where only one seller sells product which has no close substitutes. Here demand curve is downward sloped.

Wrong options:

a) it takes into account decision making by othe firms:

This option is wrong neither perfect compettion nor monopoly does not consider decisions taken by other firms.

C)cannot block entry from from other firms

Monopolist can block the entry of other firms. Monopoly marker origins, as result of some form of block in th entry of firms.

d) faces competition from close substitutes:

Neither monopolist nor perfect competition face competition from close substitues.

Rahul Sunny answered 1 year ago

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