Question

For perfectly competitive firms, marginal revenue ______ price; for monopolists marginal revenue ______ price. Multiple Choice equals; is less than equals; is greater than equals; equals is less than; equals

Answer 1

equal to

less than

---------------

A perfectly competitive market has many producers and consumer and no producer or consumer can control price, so the market firms are a price taker. The price is fixed by the markte demand and supply so the firs demand curve is perfectly elastic and that is horizontal at P=contant price recived from market equilibrium.

the price is the same at all level of output means the marginal revenue is the same so the MR=P

-----------

A monopoly is only one firm in the market, so it has power over price.

the firm can sell more goods are lower prices means the price decreases as quantity increases, so the marginal revenue decreases by double speed than the price

MR<P