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Homework answers / question archive / Which of the following is a characteristic of monopoly? A
Which of the following is a characteristic of monopoly?
A. A single firm in the industry
B. Perfectly elastic demand curve
C. Price equal to marginal revenue
D. Weak barriers to entry
E. Zero economic profits
The correct answer is: A). A single firm in the industry.
Monopoly is the sole trader in the whole industry. He/she maximizes profit by producing where marginal revenue is equal to marginal cost. This enable him/her to restrict volume of output while driving price up. The monopoly faces a downward sloping demand curve and price is on MR=MC at profit maximizing output.
