Question

Which of the following is true for perfect competition but not true for monopolistic competition and monopoly? • MC = MR • P = MC • Positive long run profits • P = MC and positive long run profits

Answer 1

Answer: Marginal cost equal to Price(MC=P) i.e.The firm will produce at a point where price equals marginal cost.

EXPLAINATION: Market which is perfectly competitive, price equals to marginal cost and firm can attain profit at zero.Where as a monopoly prices are always set above marginal cost and firms earns a positive economic profit. Hence The firm will produce at a point where price equals marginal cost is true for perfect competition market whereas not for monopoly and monopolistic market.