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Explain why “profit maximization” leads to different price depending on wether the market is “perfect competition”...

Explain why “profit maximization” leads to different price depending on wether the market is “perfect competition” or “monopolistic competition.”
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Answer #1

The price is different for the profit-maximisation of perfect competition and monopolistic competition. This is because the profit-maximisation condition of the pefect competion is determined by condition;

Price=MC

The profit-maximisation condition of the monopolistic competion is;

MR=MC

and the corresponding to the profit-maximising quantity on the demand curve the price is determined.

This is the reason why the profit-maximising leads to different price for the perfect competive firm and for the monopolistic competitive firms.

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