When maximizing profit,the perfect competitor ______ produces at the output at which MC = MR;the monopolist ____ produces at the output at which MC = MR.
A)always;always
B)sometimes;sometimes
C)always;sometimes
D)sometimes;always

Question

Quizplus · Accepted Answer

A perfect competitor always produces at the output at which MC = MR in order to maximize profit. This is because a perfect competitor cannot influence the market price and must therefore take the price as given. The price is equal to the marginal revenue (MR) for a perfect competitor, so setting MC equal to MR ensures that the production level will result in the maximum profit.
On the other hand, a monopolist sometimes produces at the output at which MC = MR to maximize profit. This is because a monopolist has market power and can influence the market price by adjusting its output. Setting MC = MR ensures that the monopolist is producing at the level that will result in the maximum profit. However, a monopolist may choose to produce at a lower output level in order to increase market power, or at a higher output level to increase total revenue even if it means accepting lower profit.

When Maximizing Profit,the Perfect Competitor ______ Produces at the Output