Assuming that average costs are the same in both circumstances,all of the following statements except one are true regarding the long-run comparison between monopoly and perfect competition.Which is the exception?
A)The monopoly price will be higher than the competitive price.
B)The monopoly quantity will be lower than the competitive quantity.
C)The monopoly produces below capacity whereas the competitive firm produces at capacity output.
D)The monopoly may be making economic profits whereas the competitive firm will not.
E)The total costs of production for the monopolist will be greater than for the competitive firm.

Question

Quizplus · Accepted Answer

In perfect competition, firms operate at minimum efficient scale where average costs are minimized. In a monopoly, the firm operates at a quantity where marginal revenue equals marginal cost, which is less than the efficient output in perfect competition. Therefore, total costs of production for the monopolist will be lower than for the competitive firm.

Assuming That Average Costs Are the Same in Both Circumstances,all