Identify the true statement from the following list.

Question

BlackTom AI · Accepted Answer

When evaluating statements about monopolies, I’ll go option by option to unpack what each claim implies about supply behavior and market power.
Option A: 'a monopoly firm has an downward-sloping supply curve and is a price maker' This is inaccurate because, in the standard microeconomic model, a monopolist does not have a well-defined downward-sloping supply curve in the same sense as a competitive firm; instead, the monopolist determines price by selecting quantity on its downward-sloping demand curve. The phrase 'downward-sloping supply curve' mischaracterizes the supply decision under monopoly, and while a monopolist is indeed a price maker, the supply curve concept is not the typical way we depict monopolistic behavior.
Option B: 'a monopoly firm has an upward-sloping supply curve and is a price taker' This is incorrect on two counts. An upward-sloping supply curve would imply increasing quantity supplied with price in a way that matches competitive supply reasoning, which does not apply to monopolies that set price. Moreover, a price taker is characteristic of perfectly competitive firms, not monopolies. A monopolist instead has market power to influence price.
Option C: 'a monopoly firm is a price taker and has no supply curve' This mixes two ideas incorrectly. While it is true that a monopolist does not face a price-taking role, the claim that it has 'no supply curve' is also incomplete: in the standard analysis, there is no unique supply curve for a monopoly in the same sense as in perfect competition, because the quantity supplied is chosen to maximize profit at the given demand, not determined by a marginal cost schedule alone. However, the explicit statement that it is a price taker is plainly false, which makes this option incorrect.
Option D: 'a monopoly firm has no supply curve and is a price maker' This combination accurately captures the core idea: a monopolist does not have a conventional supply curve derived from marginal cost and price, since it chooses quantity to maximize profit, effectively setting the price (price maker). The 'no supply curve' phrasing aligns with standard teaching that monopolies lack a single supply curve, because the supply decision depends on the demand curve and profit-maximizing choice rather than a market-clearing price determined by supply and demand in a competitive sense. Therefore, this statement correctly describes monopoly behavior.
In summary, each option attempts to describe monopoly characteristics, but only Option D aligns with the standard theoretical depiction: monopolists are price makers and do not have a conventional supply curve. The other options either misstate the price-setting role or mischaracterize the nature of the supply relationship for a monopolist.

Identify the true statement from the following list.

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