Question

In which of the following types of markets does a single firm have the most market power? Multiple Choice Perfect competition. Monopolistic competition. Oligopoly Monopoly

Answer 1

Q1
Answer
Option 4
Monopoly
Monopoly is only one firm in the market and the entry in the market is restricted so the firm has the most power as the firm can charge a higher price and make profit more than all other markets.
Perfect competition firms have no market power because of the perfect information, many buyer and sellers, free entry and exit
Monopolistic competition market firms have some power because of the differentiated product but the entry is free and many sellers.
Oligopoly has more power because there are few sellers and entry is restricted.

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Q2
Answer
Option 1
the price is determined by the market demand and supply and not an individual firm.
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Q3
Answer
Option 3
A single firm has a small level of production over the size of the industry and that does not affect the market.

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Q4
Answer
Option 2
Horizontal
The firm is price taker so the demand curve is horizontal at the market price.
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Q5
Answer
Option 1
equals to marginal revenue
The demand curve is horizontal so the MR curve is also the same at the market price and that is the same as the firms demand curve