10 Questions
What condition does the monopolist seek to achieve when maximizing profit?
Produce the quantity output at which MR=MC
In perfect competition, what curve is the same as the firm's MR curve?
Demand curve
Why does the MR curve lie below the demand curve in monopoly?
P>MR
At the profit-maximizing quantity Q1, what is the relationship between price and marginal cost in monopoly?
Price is greater than marginal cost
Why is a monopolist considered not resource allocative efficient at Q1?
P>MC
What factor determines whether profits are earned in monopoly at Q1?
$P1$ vs. $ATC$ at $Q1$
What does the monopolist charge at Q1 in terms of profit maximization?
$P1$ which maximizes profit
Which price does the monopolist charge at Q1 if P1 is less than ATC?
A price higher than average total cost
What relation must hold for a monopolist to maximize profit?
$MR=MC$
How does the demand curve differ between monopoly and perfect competition?
In monopoly, demand equals marginal revenue.
Learn about the market extremes of perfect competition and monopoly in Lesson 7 of CFUNBUS3. Understand the theory of perfect competition including its 4 key assumptions. Explore the differences between perfect competition and monopoly.
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