One difference between perfectly competitive markets and a single-price monopoly is that
A)marginal revenue equals marginal cost for perfectly competitive firms,but not for single-price monopolists.
B)marginal cost equals average variable cost for perfectly competitive firms but not for single-price monopolists.
C)price equals minimum average total cost for single-price monopolists but not for perfectly competitive firms.
D)marginal revenue equals price for perfectly competitive firms,but not for single-price monopolists.
E)marginal revenue equals marginal cost for single-price monopolists but not for perfectly competitive firms.

Question

Quizplus · Accepted Answer

In perfectly competitive markets, firms are price takers, meaning the price of the product is determined by the market, and thus the price equals marginal revenue for each unit sold. However, a single-price monopolist faces a downward-sloping demand curve, meaning that to sell additional units, the monopolist must lower the price, causing marginal revenue to be less than the price.

One Difference Between Perfectly Competitive Markets and a Single-Price Monopoly