Question 21
Market StructuresWhich of the following is true of the monopolist?
- A.His average revenue curve is horizontal
- B.He determines both price and output
- C.His demand and marginal revenue curves are the same
- D.He determines either price or output
Show the answer and explanation
Answer: D (He determines either price or output)
Explanation
A monopolist faces a downward-sloping demand curve: if he fixes the price, buyers decide the quantity, and vice versa.