A major difference between a single-price monopolist and a perfectly competitive firm is that the: a) monopolist can maximize profit by setting the price of the output where demand is inelastic

Marketing Jan 14, 2021

A major difference between a single-price monopolist and a perfectly competitive firm is that the:

a) monopolist can maximize profit by setting the price of the output where demand is inelastic.

b) monopolist can always increase its profits by increasing the price of its output.

c) monopolist's marginal revenue is less than price.

d) monopolist is guaranteed to earn an economic profit.

Expert Solution

The correct answer is c) monopolist's marginal revenue is less than price.

The marginal revenue and price for all units are the same for a perfectly competitive firm. On the other hand, for a monopolist, the marginal revenue is always lower than the price.

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