A monopoly:
A)is constrained because its decisions cannot affect the market price.
B)is constrained by demand.
C)faces a horizontal demand curve.
D)is constantly threatened by the entry of new firms.

Question

Quizplus · Accepted Answer

A monopoly is constrained by demand because it can only sell more by lowering its price, and its decisions directly affect the market price due to its unique position. Unlike competitive firms, a monopoly faces a downward-sloping demand curve, not a horizontal one, indicating its power to set prices. While entry barriers protect monopolies, they are not "constantly" threatened by new entrants due to these barriers.

A Monopoly