What can, in general, be said about a monopoly's supply curve? a

Marketing Jan 11, 2021

What can, in general, be said about a monopoly's supply curve?

a. A monopoly's supply curve, like that for a competitive firm, coincides with its marginal cost curve.

b. A profit-maximizing monopoly will operate only on the elastic portion of its supply curve.

c. The monopoly's supply curve is more inelastic than if the firm were competitive.

d. The concept of a supply curve is meaningless in the context of the monopoly problem.

Expert Solution

The correct answer is d. The concept of a supply curve is meaningless in the context of the monopoly problem.

This is because, in the case of a monopoly, the (sole) operating firm is not a price taker and thus, has the market power to set the price for the goods offered. As a result, it is useless to know about the supply curve since the firm will simply produce according to the demand.

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