Which of the following statement is TRUE? a) A perfectly competitive firm is a price SETTER,...

Which of the following statement is TRUE?

a) A perfectly competitive firm is a price SETTER, while a monopoly is a price TAKER

b) A perfectly competitive firm faces market demand, while a monopoly faces a perfectly elastic demand

c) Both monopoly and perfectly competitive firm faces market demand

d) Both monopoly and perfectly competitive firm should produce at output level where marginal revenue = marginal cost

Solutions

Expert Solution

Ans) the correct option is D) Both monopoly and perfectly competitive firm should produce at output level where marginal revenue = marginal cost.

In perfectly competitive market, price is equal to marginal revenue so P = MR = MC.

In monopoly, profit is maximized at MR = MC.

Rahul Sunny answered 1 year ago

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