Asked by Adriana Davis on Jun 05, 2024
Verified
Unlike a perfectly competitive firm,a profit-maximizing monopolist
A) can select a price and sell as much as it desires.
B) equates marginal revenue and marginal cost.
C) can produce any desired amount and charge as much as it desires.
D) can choose a price and output combination from a downward-sloping demand curve.
Perfectly Competitive
A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect knowledge, where no single firm can influence the market price.
Profit-Maximizing
The method through which a company identifies the pricing and production quantity that maximizes its profits.
- Contrast the revenue, cost structures, and output determinations of monopolies with those of perfectly competitive firms.
Verified Answer
TK
Tyler KinchenJun 11, 2024
Final Answer :
D
Explanation :
A monopolist has the power to choose both the price and the quantity. It can set a higher price and produce a lower quantity or a lower price and a higher quantity, all depending on the market demand. The demand curve for a monopolist is downward-sloping, so it determines the profit-maximizing price and the corresponding output level where marginal revenue equals marginal cost.
Learning Objectives
- Contrast the revenue, cost structures, and output determinations of monopolies with those of perfectly competitive firms.