Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximising outputs?
A)Marginal revenue is less than price.
B)Marginal revenue equals marginal cost.
C)Price equals marginal cost.
D)Average revenue equals average cost.

Question

Quizplus · Accepted Answer

A monopolist has market power and can set price above marginal cost, meaning that marginal revenue will be less than price. In contrast, in perfect competition, firms are price takers and must accept the market price, making marginal revenue equal to price. Options B and C are characteristics of firms that are in allocative efficiency, something that neither perfect competition nor monopoly can achieve. Option D is not relevant to determining whether a firm is a monopoly or in a perfectly competitive market.

Which of the Following Statements Applies to a Monopolist but Not