The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-Monopoly is a market structure in which:
A)there are significant barriers to the entry of new firms.
B)the firms face a perfectly elastic demand curve.
C)there are a large number of close substitutes for the good produced.
D)a homogeneous product is sold.
E)the firms are price takers.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-Monopoly is a market structure in which:
A)there are significant barriers to the entry of new firms. 
B)the firms face a perfectly elastic demand curve. 
C)there are a large number of close substitutes for the good produced. 
D)a homogeneous product is sold. 
E)the firms are price takers.

Quizplus · Accepted Answer

Monopoly is a market structure where there are significant barriers to the entry of new firms. In this case, the firm has control over the price, as there are no close substitutes, and the demand curve is downward sloping. The other options are characteristics of other market structures, such as perfect competition (B, C, E) or monopolistic competition (D).

The Figure Given Below Shows the Revenue and Cost Curves