What is the image of the beast?
The image of the beast is an idol made in honor of the Antichrist, set up by the false prophet in the temple at Jerusalem, and given the power to speak and to demand worship from the whole world.
Scripture reveals that after the first beast (the Antichrist) receives his deadly wound and is healed, a second beast rises up out of the earth. This second beast, who has two horns like a lamb but speaks like a dragon, is the false prophet. He works alongside the Antichrist, using all the power of the first beast, and causes the earth and its people to worship the first beast whose wound was healed.
This false prophet performs great wonders, even making fire come down from heaven in the sight of men, and by these miracles he deceives the people of the earth. He commands them to make an image to the beast, an image of the one who was wounded by a sword yet lived. He is then given power to give life to this image, so that it can actually speak, and he causes that as many as will not worship the image of the beast should be killed.
This image is what Jesus referred to as the abomination of desolation, spoken of by Daniel the prophet, standing where it ought not. It is placed in the Holy of Holies of the temple in Jerusalem as an idol, an insult to the Jews, and the whole world is prepared to bow down and worship it. So the image of the beast is not simply a statue, but an idol empowered to speak and enforced upon the world through the threat of death, forcing all people to choose between worshipping the Antichrist's image or being killed for refusing.
Those who refuse to worship this image and refuse the mark of the beast face persecution and are unable to buy or sell, yet they remain faithful. The image stands as the centerpiece of the false worship system that the Antichrist and the false prophet set up during the reign of the beast.
The scriptures
And I beheld another beast coming up out of the earth; and he had two horns like a lamb, and he spake as a dragon. And he exerciseth all the power of the first beast before him, and causeth the earth and them which dwell therein to worship the first beast, whose deadly wound was healed. And he doeth great wonders, so that he maketh fire come down from heaven on the earth in the sight of men, And deceiveth them that dwell on the earth by the means of those miracles which he had power to do in the sight of the beast; saying to them that dwell on the earth, that they should make an image to the beast, which had the wound by a sword, and did live. And he had power to give life unto the image of the beast, that the image of the beast should both speak, and cause that as many as would not worship the image of the beast should be killed.
And arms shall stand on his part, and they shall pollute the sanctuary of strength, and shall take away the daily sacrifice, and they shall place the abomination that maketh desolate.
But when ye shall see the abomination of desolation, spoken of by Daniel the prophet, standing where it ought not, (let him that readeth understand,) then let them that be in Judaea flee to the mountains:
And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name. Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.
From the books
This answer is drawn from these passages in the Mary Banks Faith Library.