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Firms in which of the following maket structure(s) use the Rule MR=MC to determine the profit...

Firms in which of the following maket structure(s) use the Rule MR=MC to determine the profit maximizing rate of output? Perfectly competitive firms Monopolies Monopolistacally competitive firms all the above.

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Answer #1

Option D.

  • All the above firms, use the rule MR = MC as a profit maximizing rate of output.
  • Perfect competition refers to the market structure in which there are many firms selling products that are close substitutes of each other.
  • A monopoly is a market structure characterized by a single firm selling unique goods and services.
  • While a monopolistically competitive market is characterized by large number of firms selling slightly differentiated products from other firms.
  • Inorder to maximize their profits, a perfectly competitive firm, a monoplist and a monopolistically competitive firm set their marginal revenue equal to its marginal cost.
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