The perfectly competitive firm produces the quantity of output at which __________, and the single-price monopolist produces the quantity of output at which __________. The perfectly price-discriminating monopolist is like the __________ in this regard.
A)P = MC; P MC; single-price monopolist
B)P MC; P = MC; perfectly competitive firm
C)P = MC; P MC; perfectly competitive firm
D)P MC; P = MC; single-price monopolist

Question

The perfectly competitive firm produces the quantity of output at which __________, and the single-price monopolist produces the quantity of output at which __________. The perfectly price-discriminating monopolist is like the __________ in this regard.
A)P = MC; P > MC; single-price monopolist
B)P > MC; P = MC; perfectly competitive firm
C)P = MC; P > MC; perfectly competitive firm
D)P > MC; P = MC; single-price monopolist

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce where price (P) equals marginal cost (MC) to maximize profit. A single-price monopolist sets output where marginal revenue equals marginal cost (MR=MC), but sells at a price (P) greater than MC. A perfectly price-discriminating monopolist effectively operates like a perfectly competitive firm in that it captures all consumer surplus by charging each consumer their maximum willingness to pay, effectively equating price and marginal cost for every unit sold.

The Perfectly Competitive Firm Produces the Quantity of Output at Which