Which of the following pairs of terms are synonymous in a pure monopoly?

• A. Price and Marginal Cost
• B. Firm and Industry
• C. Demand and Supply
• D. Average Cost and Marginal Revenue

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the context of a pure monopoly. In a pure monopoly, there is only one firm that constitutes the entire industry, meaning the firm and the industry are effectively the same entity.
2. Step 2: Analyze the term 'Price and Marginal Cost'. In a monopoly, price is typically greater than marginal cost due to market power, so these terms are not synonymous.
3. Step 3: Consider 'Demand and Supply'. In a monopoly, the firm faces the market demand curve, but there is no separate supply curve as in perfect competition, so these terms are not synonymous.
4. Step 4: Examine 'Average Cost and Marginal Revenue'. These are distinct concepts: average cost relates to the cost per unit, while marginal revenue is the additional revenue from selling one more unit, so they are not synonymous.
5. Step 5: Conclude that 'Firm and Industry' are synonymous in a pure monopoly because the single firm represents the entire industry.