Question
In: Economics
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
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