The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-In general, the two extreme cases of market structure models are represented by:
A)monopolistic competition and oligopoly.
B)oligopoly and monopoly.
C)oligopoly and perfect competition.
D)perfect competition and monopoly.
E)perfect monopoly and oligopolistic competition.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-In general, the two extreme cases of market structure models are represented by:
A)monopolistic competition and oligopoly. 
B)oligopoly and monopoly. 
C)oligopoly and perfect competition. 
D)perfect competition and monopoly. 
E)perfect monopoly and oligopolistic competition.

Quizplus · Accepted Answer

The two extreme cases of market structure models are perfect competition and monopoly. In perfect competition, there are many small firms, each producing an identical product, and no firm has any market power. In monopoly, there is only one firm that controls the entire market and has the ability to set prices. The graph provided does not fit the characteristics of monopolistic competition or oligopoly, which both involve some degree of market power and product differentiation among firms. Therefore, D is the best choice as it correctly identifies the two extreme cases of market structure models.

The Figure Given Below Shows the Revenue and Cost Curves