Question

A significant difference between monopolies and competitive firms is that A. a​ monopoly's demand curve is the​ industry's demand​ curve, while the competitive​ firm's demand curve is perfectly elastic. B. the competitive firm must drop its price to sell more while the monopolist can keep price constant. C. low entry barriers exist for​ monopolies, but not for competitive firms. D. competitive firms control market​ supply, but monopolies do not.

Answer 1

A

Step-by-step explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.

An example of a monopoly is a utility company

Because there is only one firm in the monopoly industry, a ​ monopoly's demand curve is the​ industry's demand​ curve