Final answer:
A firm with a monopoly can set its own prices without considering competitors, as it is the sole producer in the market. However, it must still account for consumer demand when setting prices. Other firms are either competitors on price, followers, collaborators, or must exit the market due to the monopoly's dominance.
Step-by-step explanation:
When a firm can ignore the prices other firms charge and other firms must respond to its pricing decisions, the firm in question has a monopoly in the market. A monopoly occurs when one firm produces all the output in a market, creating barriers to entry for others, leading to a lack of significant competition. In such a situation, other firms may have to either compete on price, follow the monopolist's pricing decisions, collaborate with it, or exit the market. A monopoly chooses its profit-maximizing quantity of output and its price based on its total revenues and total costs, while also considering its demand curve, which is downward-sloping unlike that of a perfectly competitive firm. While the monopoly can set the price, it is still constrained by consumer demand and cannot compel consumers to buy its product.