Complete the problems and post your answers on perfect competition and pure mono
ID: 1226373 • Letter: C
Question
Complete the problems and post your answers on perfect competition and pure monopoly solutions. Repond to two of your classmates post. What is the difference between and purely competitive market and pure monopolist in terms of profit maximization and pricing. The four perfect competitors shown above have hired you to advise them. The only concern they have is to maximize profits. Based on your analysis of the data for each of their situations, what would you advise each of these firms to do and why?Explanation / Answer
To maximise profits Marginal cost of production must equal the marginal revenue , i.e. MC=MR
For these firms, firm 1 is clearly making a profit and it can still continue production of output to generate revenue.Firm 4 is not making profit or loss . It is breaking even and hence can continue production by either reducing its subsequent cost or increasing revenue.
Firms 2 and 3 are making a loss and may be advised to go out of production and stop producing further.
In case of a perfectly competitive firm, the firm can go out of production in case it is making a loss as opposed to a monopoly which might remain in production despite firm losses.
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