Question

Which of the following statements are correct?
(I) Monopolistic firms face a horizontal market demand curve
(II) Perfectly competitive firms sell differentiated products
(III) Output of one Cournot duopoly firm depends on the output of the other firm
(IV) Monopolistic firms do not have a supply curve
Choose the correct answer from the options given below:

• A. (I) and (II)
• B. (II) and (III)
• C. (III) and (IV)
• D. (I) and (IV)

Hint:

Cournot duopolies show how firms make output decisions based on competitors’ outputs, and monopolistic firms do not have a supply curve due to price-setting behavior.

Answer 1

The Correct Option is C

In the context of market structures:
Monopolistic firms do not have a supply curve as they set prices, unlike perfectly competitive firms. 
In Cournot duopoly, each firm’s output decision is based on the other’s output. 
Thus, the correct answer is (c).