Question : If the ___ firm has zero or only a fixed cost, the quantity supplied in equilibrium is given by the point where the marginal revenue is zero.
Option 1: perfect competition
Option 2: monopoly
Option 3: oligopoly
Option 4: monopolistic competition
Correct Answer: monopoly
Solution : The correct answer is monopoly .
Monopolies are market arrangements in which there is only one vendor for a product or service. This gives the monopolist complete market price power. In a monopolistic market, the monopolist will produce the level of production at which marginal income equals marginal cost. If the monopolist, on the other hand, has no or only fixed costs, the marginal cost is 0 at all output levels. This means that the monopolist will produce the amount of goods where the marginal income is zero.
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