Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:
A) charge a lower price than the perfectly competitive firm.
B) charge a higher price than the perfectly competitive firm.
C) charge the same price as the perfectly competitive firm.
D) refuse to operate in the short run unless an economic profit could be made.

Question

Quizplus · Accepted Answer

A monopolist has market power, which allows them to charge a higher price than a perfectly competitive firm with the same cost curves. The monopolist can decrease their output to increase their price and profits, while the perfectly competitive firm has no such ability and must accept the market price. Therefore, the monopolist would charge a higher price than the perfectly competitive firm in this scenario.

Suppose a Monopolist and a Perfectly Competitive Firm Have the Same