Which of these is a key difference between a perfectly competitive firm and a monopolist that does not practice price discrimination?
A)The marginal cost curve is U-shaped for a perfectly competitive firm but not for a monopolist.
B)Price is equal to average revenue for a perfectly competitive firm in equilibrium but not for a monopolist.
C)Price is equal to marginal revenue for a perfectly competitive firm in equilibrium but not for a monopolist.
D)The average revenue curve is the demand curve for a perfectly competitive firm but not for a monopolist.
E)A monopolist aims to maximize profits, while a perfectly competitive firm tries to maximize total revenue.

Question

Quizplus · Accepted Answer

In perfect competition, the demand curve is perfectly elastic, meaning that the firm can sell as much as it wants at the market price. Therefore, the price is equal to both average revenue and marginal revenue. In contrast, a monopolist faces a downward sloping demand curve and must decrease the price to sell more units, making the marginal revenue less than the price. Thus, the price is not equal to marginal revenue for a monopolist.

Which of These Is a Key Difference Between a Perfectly