A firm is a monopoly if
A) it faces a demand curve for its product that equals market demand.
B) it is a very large firm.
C) it takes its rivals' actions into account when choosing its price and output levels.
D) its production decisions do not affect the price of its product.

Question

Quizplus · Accepted Answer

A firm is a monopoly if it faces a demand curve for its product that equals market demand. A monopoly is a market condition in which a single seller faces no competition and has control over the price of its product, which means that the demand curve facing the firm is the same as the market demand curve. Therefore, option A is the correct choice. Option B is incorrect because the size of the firm does not define a monopoly. Option C is incorrect because a monopoly does not have any rivals to take into account when setting prices. Option D is incorrect because the production decisions of a monopolist do affect the price of its product.

A Firm Is a Monopoly If