Question

Use the cost and revenue data to answer the questions. Price 90 80 Quantity 15 30 45 60 75 70 Total revenue 1350 2400 3150 3600 3750 3600 Total cost 900 1500 2250 3150 4200 5400 60 50 9040 If the firm is a monopoly, what is marginal revenue when quantity is 30? MR = $ 70 What is marginal cost when quantity is 60? MC = $ 60

I just need help with comparing monopoly to perfect competition, which statement are true  

Answer 1

In the perfect competition there are large number of firms selling their product at the a price that is equal to the marginal cost, where in the monopoly there is a single seller and the price is well above the marginal cost. In the monopoly the market output is much lower than the perfect competition, the monopoly firm has got the market so he can fix any price he wants. The monopoly is is not very responsive to consumers , while in the perfect competition the demand is elastic due to the high price so they need to care the likes of consumers other wise they will loose all sales.

Ans:

• The monopoly price is higher.
• The monopoly is likely to be less responsive to consumers.