Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:
A) charge a lower price than the perfectly competitive firm.
B) charge a higher price than the perfectly competitive firm.
C) charge the same price as the perfectly competitive firm.
D) refuse to operate in the short run unless an economic profit could be made.
E) refuse to operate in the short run if an economic loss was present.

Question

Quizplus · Accepted Answer

The monopolistic firm would charge a higher price than the perfectly competitive firm since it has market power and can prevent competition. The monopolist would produce less quantity and charge a higher price to maximize their profits, while the perfectly competitive firm would produce at the efficient level and charge a price equal to their marginal cost.

Suppose a Monopolist and a Perfectly Competitive Firm Have the Same