Question

Which of the following is true of both a monopoly and a firm in a perfectly...

Which of the following is true of both a monopoly and a firm in a perfectly competitive market?

a. both produce where MR=MC

b. both produce where P>MR

c. both make long-run profits

d. both produce the same quantity of output

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Answer #2

Ans: a ) both produce where MR = MC

Explanation:

Under perfect competition , the profit maximization condition is where price equals marginal cost ( P = MC). At the equilibrium level of output ,P = AR = MR = MC. Under this market , firm is not able to change the market price because the firm is the price taker whereas the industry is the price maker. So the price and marginal revenue is same.

Under monopoly market structure , the profit maximization condition is where marginal revenue equals marginal cost ( MR = MC ).

answered by: anonymous
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