Under both perfect competition and a single priced monopoly case, a firm:
A) is a price taker.
B) is a price maker.
C) will shut down in the short run if price falls short of average total cost.
D) sets marginal cost equal to marginal revenue.

Question

Quizplus · Accepted Answer

In both perfect competition and monopoly, firms set marginal cost equal to marginal revenue to maximize profit. However, in perfect competition, firms are price takers, while monopolies are price makers.

Under Both Perfect Competition and a Single Priced Monopoly Case