Which of the following is inconsistent with a monopoly?
A)A market where a single seller operates
B)A market that has a downward-sloping demand curve
C)A market where the firm is the price maker
D)A market that experiences economies of scale
E)A market that allows free entry of competing firms

Question

Quizplus · Accepted Answer

Monopoly implies that there is only one seller in the market, and the firm has the power to set prices. Therefore, choices A, B, and C are consistent with a monopoly. Additionally, a monopoly can benefit from economies of scale, which means that the unit cost of production decreases with an increase in output. Thus, choice D is also consistent with a monopoly. However, by definition, a monopoly restricts the entry of other firms into the market, and free entry of competing firms contradicts that. Therefore, choice E is inconsistent with a monopoly.

Which of the Following Is Inconsistent with a Monopoly