Question

Under the same demand curve and marginal cost, which of the following model is the most...

  1. Under the same demand curve and marginal cost, which of the following model is the most profitable for firms? Choose one and provide your reasons.

  1. Bertrand competition.
  2. Cournot competition.
  3. Perfect competition.
  4. Each model ensures the same profit
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Answer #1

Answer - perfect competition

Reason - Under same demand curve and marginal cost , the perfect competition is the most profitable for the firm because in perfect competition a firm can sell as much quantity they wish to sell and for as long as the perfectly competitive firm accept the prevailing market price. If the firm wishes to sell larger quantity at current price level and at current demand in the market it can make as much profit as they want. This means the total revenue will continue to increase when firm increase the number of units to sell in the market

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