Which of the following statement does NOT correctly characterize a monopoly market? Options: There are many...

Which of the following statement does NOT correctly characterize a monopoly market?

Options:

		There are many buyers and only on seller.
		Market price is set to be equal to the average revenue.
		The average revenue is equal to the marginal revenue.
		The seller has the pricing power

Solutions

Expert Solution

In theoretical terms monopolies is a market type in which-

There is single seller and a large number of buyers in the market

Long term economic profit is positive

There are barriers to entry and exit in the market

Price is only decided by the single seller

The seller has the market setting power

Market price is set where it matches with the average revenue as shown in the diagram below

But it is not true that average revenue is equal to the marginal revenue so the correct answer here is option C

Rahul Sunny answered 1 year ago

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