A monopoly is likely —- and —- than a comparable perfectly competirive form

Expert Solution

A monopoly is likely to produce less and charge more than a comparable perfectly competitive firm.

In a perfectly competitive market, there are many producers and consumers, no barriers to exit and entry into the market, perfectly homogenous goods, perfect information, and well-defined property rights. Perfectly competitive producers are price takers that can choose how much to produce, but not the price at which they can sell their output.

A monopoly exists when there is only one producer and many consumers.Monopolies are characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. Monopolists have the ability to change the market price based on the amount they produce since they are the only source of products in the market. When a monopolist produces the quantity determined by the intersection of MR and MC, it can charge the price determined by the market demand curve at the quantity. Therefore, monopolists produce less but charge more than a firm in a competitive market.

Rahul Sunny answered 2 years ago

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A monopoly is likely —- and —- than a comparable perfectly competirive form

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