Assume that a pure monopolist and a purely competitive firm have the same unit c

Question

Assume that a pure monopolist and a purely competitive firm have the same unit costs. In this case, resources will be allocated

A. efficiently because the pure competitor produces at the point of minimum ATC and equates price and MC.

B. efficiently because the pure competitor earns only a normal profit.

C. inefficiently because the monopolist does not produce at the point of minimum ATC and does not equate price and MC.

D. inefficiently because the monopolist does not produce in the elastic range of the demand curve.

Explanation / Answer

option A is right

pure competitor will use the resources in an efficient way becuase of stiff competiton he plans to use the resources in an optimum way and in a way the total cost will become less.

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