Competitive firms differ from monopolies in which of the following ways? (i) Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii) Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii) Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Question

Competitive firms differ from monopolies in which of the following ways? (i)	Competitive firms do not have to worry about the price effect lowering their total revenue.
(ii)	Marginal revenue for a competitive firm equals price,while marginal revenue for a monopoly is less than the price it is able to charge.
(iii)	Monopolies must lower their price in order to sell more of their product,while competitive firms do not.

Quizplus · Accepted Answer

Competitive firms do not face a price effect because they are price takers, so (i) is correct. For competitive firms, marginal revenue equals price, while for monopolies, marginal revenue is less than price due to the downward-sloping demand curve, so (ii) is correct. Monopolies must lower prices to sell more, unlike competitive firms, so (iii) is correct.

Competitive Firms Differ from Monopolies in Which of the Following