Both the perfectly competitive firm and the monopolist produce at the output where marginal revenue equal...

Both the perfectly competitive firm and the monopolist produce at the output where marginal revenue equal marginal cost, but only the perfect competitive firm achieves allocative efficiency. Explain why?

Expert Solution

As we know both the monopolist and the perfectly competitive firm produces the output at that level where marginal revenue is equal to the marginal cost but only the perfectly competitive firm achieves allocative efficiency. The reason behind this is that, the perfectly competitive firm faces a lots of competition from other sellers who are selling exactly the same commodity and each firm in the perfect competition has no control over the prices as the price is by the industry. On the other hand, monopolist is a single seller to the market and he has full control over the market and the price charged by the monopolist is always greater than the marginal cost, whereas. firms in the perfect competition cannot charge the price greater than the marginal cost because if any firm tries to charge the price which is greater than the marginal cost then no one will buy from that firm because there are other firms who are selling exactly the same commodity at the price being equal to marginal cost.

Rahul Sunny answered 8 months ago

In long run equilibrium for a perfectly competitive firm; the firm will produce where A. Marginal...

In long run equilibrium for a perfectly competitive firm; the firm will produce where A. Marginal cost is at a minimum B. Average fixed cost is at a minimum C. Average variable cost is at a minimum D. Average total cost is at a minimum Height of a marginal product product curve shows: A. the additional cost of producing one more unit of a good B. the additional production from producing one more unit of the good. C. the additional...

A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist...

A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost. true or false Price discrimination is a rational strategy for a profit-maximizing monopolist when there is no opportunity for customers to engage in arbitrage across market segmentations true or false When regulating a monopoly with average cost pricing, the monopoly is able to enjoy a zero economic profit and the deadweight loss of...

8) For a perfectly competitive firm, marginal revenue is

8) For a perfectly competitive firm, marginal revenue isA) equal to the price.B) less than the price.C) undefined because the firm's demand curve is horizontal.D) greater than the price.and10) A perfectly competitive firm will maximize profit when the quantity produced is such that theA) firm's marginal revenue is equal to its marginal cost.B) price exceeds the firm's marginal cost by as much as possible.C) firm's marginal revenue exceeds its marginal cost by the maximum amount possible.D) firm's total revenue is...

11. A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue will

11. A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue willA) rise and its total variable cost will rise even more.B) rise and its total variable cost will rise, but not by as much.C) fall but its total variable cost will rise.D) fall and its total variable cost will fall, but not by as much.12. Bob's Lawn Care Services is a perfectly competitive...

1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price....

1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price. decreases as the firm increases output. is greater than price. 2-Which of the following are characteristics of a monopoly market structure? In a monopoly, there is only one firm in the industry. no close substitutes are available. firm(s) have little to no price-setting power. there are low barriers to entry into the market. 3-You own a small deli that sells sandwiches, salads, and soup....

1.For a firm in a perfectly competitive market, marginal revenue for any positive level of output...

1.For a firm in a perfectly competitive market, marginal revenue for any positive level of output is a) Greater than market price b) Less than market price c) The same as market price 2. Under what circumstances will a firm in a perfectly competitive industry definitely want to shut down all production in a short run setting? a) When the market price is less than ATC b) When the market price is less than AVC c) WHen the market price...

A company produces at an output level where marginal cost is equal to marginal revenue and...

A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? shut down continue to produce because the loss is less than the total fixed cost increase production to lower the marginal cost reduce output to lower the marginal cost raise the price

Suppose a firm is producing a level of output such that marginal revenue is equal to...

Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $6 per unit and is incurring average variable costs of $7 per unit and average total costs of $8 per unit. Given this information, it may be concluded that the firm: Group of answer choices is operating at maximum total profit is operating at a loss that could be reduced by shutting...

The demand curve of a perfectly competitive market is horizontal and equal to marginal revenue curve....

The demand curve of a perfectly competitive market is horizontal and equal to marginal revenue curve. However, the demand curve of a monopoly slopes downward with marginal revenue curve below the demand curve. Discuss the difference in the shape of the demand curve in both markets Discus why the MR curve of the monopoly is below it demand curve while the competitive market is equal to AR Discuss the assertion “Monopolist are price-giver while perfectly competitive market is a price-...

For a perfectly competitive firm, marginal revenue is identical to Select one: a. a and c...

For a perfectly competitive firm, marginal revenue is identical to Select one: a. a and c above b. marginal cost at every quantity. c. all of the above d. average cost at every quantity. e. price at every quantity. (wrong)

Question