The profit-maximizing perfectly competitive firm charges a price equal to __________ while the profit-maximizing monopolistic competitive firm charges a price __________.
A)marginal revenue; equal to marginal cost
B)marginal cost; greater than marginal cost
C)marginal revenue; greater than marginal revenue
D)average fixed cost; greater than average total cost
E)b and c

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms charge a price equal to marginal cost, while in monopolistic competition, firms have some power to set prices above marginal cost due to product differentiation, leading to a price greater than marginal cost and marginal revenue.

The Profit-Maximizing Perfectly Competitive Firm Charges a Price Equal to __________