[amp_mcq option1=”The monopolist always makes a profit” option2=”There is no entry for other” option3=”Equilibrium involves MC = MR and MC < P" option4="The monopolist controls the supply" correct="option4"]
The correct answer is: D. The monopolist controls the supply.
A monopoly is a market structure in which there is only one seller of a good or service. The monopolist has a great deal of market power, which means that it can set the price of its product. As a result, the monopolist’s supply curve is not a straight line, as it is in a competitive market. Instead, the monopolist’s supply curve is upward-sloping, because the monopolist will only produce more of its product if it can charge a higher price.
The other options are incorrect for the following reasons:
- Option A is incorrect because the monopolist does not always make a profit. In fact, a monopolist may make a loss if the price it charges is below its average cost.
- Option B is incorrect because there can be entry into a monopoly market if there are no barriers to entry. Barriers to entry are factors that make it difficult or expensive for new firms to enter a market.
- Option C is incorrect because the equilibrium in a monopoly market does not involve MC = MR and MC < P. In a monopoly market, the monopolist sets the price at a level where MR = MC, and P > MC.
I hope this explanation is helpful. Please let me know if you have any other questions.