Figure 11-9
-In assessing the difference between monopoly performance and that of perfect competition, the best approach is to
A)measure the output of the monopolist and the output of the perfectly competitive firm.
B)measure the output of the monopolist and the output of the perfectly competitive industry.
C)measure the output purchased by consumers from the monopolist and from the perfectly competitive firm.
D)calculate the marginal cost of the monopolist and of the perfectly competitive firm.

Question

Figure 11-9 
-In assessing the difference between monopoly performance and that of perfect competition, the best approach is to
A)measure the output of the monopolist and the output of the perfectly competitive firm. 
B)measure the output of the monopolist and the output of the perfectly competitive industry. 
C)measure the output purchased by consumers from the monopolist and from the perfectly competitive firm. 
D)calculate the marginal cost of the monopolist and of the perfectly competitive firm.

Quizplus · Accepted Answer

To assess the difference between monopoly performance and that of perfect competition, we need to compare the output of the monopolist with the output of the perfectly competitive industry as a whole, not just one firm. This is because in perfectly competitive markets, firms are price takers and cannot affect the market price, so the industry output is determined by the intersection of the industry demand and supply curves. In contrast, a monopolist can affect the market price and output, so comparing output of a single monopolist with a perfectly competitive firm may not provide a clear picture of the differences between the two market structures. Therefore, measuring the output of the monopolist and the output of the perfectly competitive industry is the best approach to assess the difference between monopoly and perfect competition.

Figure 11-9 -In Assessing the Difference Between Monopoly Performance and That of and That