Question

For each of the following statements, indicate if it more closely describes a monopoly (M) or...

For each of the following statements, indicate if it more closely describes a monopoly (M) or a competitive firm (C).

There are extensive barriers to entry for new firms.

Price will be equal to Marginal Revenue.

Price can be greater than Marginal Revenue.  

Market price will adjust until an efficient amount of resources is allocated to the industry.

Above-normal profits will disappear in the long run.

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Homework Answers

Answer #1

There are extensive barriers to entry for new firms. - Monopoly

Price will be equal to Marginal Revenue. - Perfect Competition

Price can be greater than Marginal Revenue. - Monopoly

Market price will adjust until an efficient amount of resources is allocated to the industry. - Perfect Competition

Above-normal profits will disappear in the long run. - Perfect Competition

Explanation:
In monopoly there is a single seller. Price is above marginal cost. And profit stays in the long run.
In perfect competition there are many buyers and sellers. Price is equal to marginal cost. .There is no economic profit in the long run.

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