1)Increased information _____ providers' monopoly power, thus _____ the prices paid by clients.

a. increases; increasing.

b. increases; reducing.

c. reduces; reducing.

d. reduces; increasing.

2)Which of these statements regarding the differences between monopoly and a competitive market are true? Choose one or more:

A. A monopoly is a price maker, while a competitive firm is a price taker.

B. A monopolist will produce less than the output produced in a perfectly competitive market.

C. A monopolist can earn profits in the long run, but a firm in a perfectly competitive market cannot.

D. There are more firms in a competitive market than in a monopoly.

1)The answer is C.

Increased information reduces a provider's monopoly power, thus reducing the price paid by clients. The ownership of a resource singly gives the owner the ability to raise prices of commodities over the marginal costs without losing their consumers to the other competitors. When the available information on where specific resources get provided is available for consumers, the consumers will head out to the alternative places to seek these commodities, and the providers lose the power they initially had.

The control of resources is the ultimate power in a monopolistic structure; these owners can set prices which their clients offset when they have insufficient information on the commodities.

On the other hand, if the information on these resources is readily available, the clients can seek alternative places for their products or services. Consequently, the clients may influence the prices set by their providers to reduce by bargaining if they know where else they can obtain their needs.

2)All these statements are true.

A monopoly is a price maker since it decides on the level of the price while a competitive firm accepts the price of the market. Prices in monopoly are higher and the output is lower while in a perfectly competitive market there is much more output. Monopolists earn profit in the long run because the price is above the marginal cost in the long-run equilibrium while perfect competitors can earn profit only in the short run. Finally, a monopoly market is dominated by one firm while a perfectly competitive market includes many firms.