In a market served by a monopoly, the marginal cost is $60 and the price is $110. In a perfectly competitive market, the marginal cost is $60. If the marginal cost increased from $60 to $75, the monopoly would raise its price _____, and the price in the perfectly competitive market would _____.

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In a monopoly, the price increase is typically less than the increase in marginal cost because the monopolist seeks to maximize profit without losing too many customers. In a perfectly competitive market, the price equals the marginal cost, so if the marginal cost increases to $75, the price would also increase to $75.

In a Market Served by a Monopoly, the Marginal Cost