Monopolists and markets with perfect competition
A)are similar because both maximize consumer surplus.
B)are similar because both maximize producer surplus.
C)are similar because both will find profit-maximizing output where MR = MC.
D)have no similarities because of structure.

Question

Quizplus · Accepted Answer

Both monopolists and markets with perfect competition will find their profit-maximizing output level where marginal revenue (MR) equals marginal cost (MC). In a perfectly competitive market, this leads to allocative efficiency where the price equals the marginal cost, maximizing consumer surplus. In a monopoly, however, the price will be greater than the marginal cost, leading to a deadweight loss and reduced overall market surplus. Therefore, while both types of markets have the similarity of finding the profit-maximizing output level, their outcomes are quite different due to their differing market structures.

Monopolists and Markets with Perfect Competition