An important difference between a perfectly competitive market and a monopoly is that:
A) the demand curve facing a monopoly is horizontal, while the demand curve facing a competitive ﬁrm is upward sloping.
B) a monopoly ﬁrm is a price taker, while a perfectly competitive ﬁrm is a price setter.
C) a perfectly competitive ﬁrm makes supernormal proﬁts, while a monopoly ﬁrm makes zero proﬁts.
D) market price is not equal to marginal cost in a monopoly, while for a perfectly competitive

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and the market price equals marginal cost. In contrast, a monopoly can set prices above marginal cost due to lack of competition, leading to market price not equaling marginal cost.

An Important Difference Between a Perfectly Competitive Market and a Monopoly