-Suppose the grocery store market in Kansas City is perfectly competitive.Then one store buys all the others and becomes a single-price monopoly.The figure above shows the relevant demand and cost curves.When the market is perfectly competitive,the quantity of steak is ________ pounds,and when the market is a monopoly,the quantity of steak is ________ pounds.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the quantity produced is where the price equals the marginal cost, which is typically at a higher quantity than in a monopoly. In a monopoly, the quantity is lower because the monopolist maximizes profit where marginal revenue equals marginal cost, which is at a lower quantity than in a competitive market. Therefore, the transition from a competitive market to a monopoly would decrease the quantity of steak produced from 3,000 to 2,000 pounds.

-Suppose the Grocery Store Market in Kansas City Is Perfectly