One difference between a perfectly competitive firm and a monopoly firm is a mon

Question

One difference between a perfectly competitive firm and a monopoly firm is a monopoly firm Is resource allocate efficient, and a perfectly competitive firm is not. competitive firm maximizes p -profit by producing the Quantity of output at which MR - MC, and the firm does not. the monopoly Arm charges the highest per-unit price for its product, and the perfectly competitive firm does not. the demand curve and the marginal revenue curve are the same 'or the perfectly competitive firm, but they are not the same for the monopoly firm.

Explanation / Answer

Answer) e. c and d

for a competitive firm optimum output is achieved when MR=MC.but at that point MR=MC=AR. thus, PRICE=MR=MC=AR.monopoly also maximise output BY equating MR and MC but it sets Price equal to AR which is greater than MR in case of monopoly. so here, MR=MC < Price= AR.also, in case of monopoly Because the firm lowers its price when it wants to sell more products (and vice versa), marginal revenue decreases as output increases. Therefore, the marginal revenue curve lies below the demand curve unlike in perfect competition where MR=AR.

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