Suppose demand for a monopoly's product is perfectly elastic.In this case the monopoly should set P = MR = MC and the monopoly market outcome will be identical to the competitive market outcome.

Question

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In a situation where demand is perfectly elastic, a monopoly would indeed set price (P) equal to marginal revenue (MR) and marginal cost (MC), leading to an outcome similar to that in a competitive market, where price equals marginal cost, ensuring allocative efficiency.

Suppose Demand for a Monopoly's Product Is Perfectly Elastic