The markup of price over marginal cost of a profit-maximizing firm in the long run is _____.
A)higher in a perfectly competitive market than in a monopoly market
B)higher in a monopoly market than in a monopolistically competitive market
C)higher in a perfectly competitive market than in an oligopoly
D)higher in a monopolistically competitive market than in a competitive market

Question

Quizplus · Accepted Answer

In a monopoly market, the firm has market power and can set prices above marginal cost. In a perfectly competitive market, firms are price takers and cannot set prices above marginal cost.

The Markup of Price Over Marginal Cost of a Profit-Maximizing