Multiple Choice
The table shows the cost and revenue information for a perfectly competitive firm. If the market price is equal to the firm's marginal cost at an output level of 100 units, what should the firm do to maximize profit?
100
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Suppose that Comcast is the only provider of internet service in a city. Which market structure does this scenario best represent?
A
Oligopoly
B
Monopoly
C
Monopolistic competition
D
Perfect competition
Verified step by step guidance1
Identify the key characteristic of the market: Comcast is the only provider of internet service in the city, meaning there is a single seller.
Recall the definitions of market structures: A monopoly is a market with a single seller, an oligopoly has a few sellers, monopolistic competition has many sellers with differentiated products, and perfect competition has many sellers with identical products.
Since there is only one provider, the market structure cannot be oligopoly, monopolistic competition, or perfect competition because those require multiple sellers.
Conclude that the market structure is a monopoly because a single firm controls the entire supply of the product or service in the market.
Understand that in a monopoly, the firm has significant market power to set prices, unlike in more competitive market structures.
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