Question

One difference between monopoly and perfect competition is that: a monopolist seeks to maximize profit; a...

One difference between monopoly and perfect competition is that:

a monopolist seeks to maximize profit; a perfect competitor does not.

a perfect competitor seeks to maximize profit; a monopolist does not.

the marginal revenue curve for a perfect competitor is downward sloping; for a monopolist, it is horizontal.

the marginal revenue curve for a monopolist is downward sloping; for a perfect competitor; it is horizontal.
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Answer #1

Perfect competition

In the case of perfect competition, there are a number of sellers and firms are price-taker because the price is set by the market.

Also in perfect competition, price is constant

Hence in this market, price and marginal revenue both are equal.

On a graph, demand curve and marginal revenue curve both are the same which is a straight horizontal line.

Monopoly

In the case of monopoly, there is a single seller in the market hence the seller charges different prices to sell more output and as a result, demand is downward sloping which results in marginal revenue curve as downward sloping.

Hence 4th option is correct which is, the marginal revenue curve for a monopolist is downward sloping; for a perfect competitor; it is horizontal.

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