This graph shows the cost and revenue curves faced by a monopoly.
According to the graph shown,if this were a perfectly competitive market,the outcome would be:
A)Q1,P1.
B)Q1,P3.
C)Q2,P2.
D)The graph is of a monopoly,and therefore there is no way to determine a perfectly competitive outcome.

Question

This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown,if this were a perfectly competitive market,the outcome would be:
A)Q1,P1. 
B)Q1,P3. 
C)Q2,P2. 
D)The graph is of a monopoly,and therefore there is no way to determine a perfectly competitive outcome.

Quizplus · Accepted Answer

In a perfectly competitive market, equilibrium is achieved at the point where marginal cost (MC) equals marginal revenue (MR), which is represented by Q2 and P2 on this graph. At this point, the firm is producing at the efficient level of output and charging the lowest possible price. Therefore, the correct answer is C, Q2 and P2.

This Graph Shows the Cost and Revenue Curves Faced by a Monopoly