A perfectly competitive firm charges a price that is _____ and produces _____ than a monopolist.
A) lower; more
B) higher; less
C) higher; more
D) lower; less

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and charge a price equal to marginal cost, which is typically lower than the price charged by a monopolist, who has market power and can set prices above marginal costs. Consequently, a perfectly competitive firm produces more output than a monopolist, as it operates where price equals marginal cost, which is typically at a higher output level than the monopolist's profit-maximizing output level.

A Perfectly Competitive Firm Charges a Price That Is _____