Multiple Choice
Which of the following is true about firms in monopolistic competition?
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12. Monopoly
Characteristics of Monopoly
Multiple Choice
Which of the following denotes the typical shape of the monopolist's total cost curve?
A
Upward-sloping and convex
B
Downward-sloping and concave
C
Horizontal and linear
D
U-shaped
Verified step by step guidance1
Recall that the total cost (TC) curve represents the total cost of production at different output levels for a firm.
Understand that for a monopolist, as output increases, costs generally increase due to the use of more inputs, so the total cost curve is typically upward-sloping.
Consider the shape of the curve: convex means the slope of the total cost curve increases as output increases, reflecting increasing marginal costs at higher output levels.
Recognize that a downward-sloping total cost curve would imply costs decrease as output increases, which is not typical for production costs.
Recall that a U-shaped curve is usually associated with average cost curves, not total cost curves, and a horizontal linear curve would imply constant total costs regardless of output, which is unrealistic.
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