In both monopolies and perfectly competitive markets, firms set prices equal to their marginal revenue.

Name: In both monopolies and perfectly competitive markets, firms set prices equal to their marginal revenue.
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Question

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In perfectly competitive markets, firms are price takers and sell at the market price, which equals their marginal revenue. In contrast, monopolies can set prices above marginal cost because they have market power, so their price is not equal to marginal revenue.

In Both Monopolies and Perfectly Competitive Markets, Firms Set Prices