a.) How is a monopolistic firm different from a perfectly competitive firm? Which firm will have...
a.) How is a monopolistic firm different from a perfectly competitive firm? Which firm will have a more efficient equilibrium outcome?
b.) What is the difference between marginal product and marginal revenue product of a resource?
Homework Answers
A.A monopolistic firm is a single seller controlling the entire market and producing unique good with no substitute.Perfectly competitive firms are one of many firms in the market producing homogeneous goods with a large number of substitutes.
Monopolies are protected against competition through patents, copyrights etc.There is free entry and exit into perfectly competitive market.
A monopolist charges price greater than MC.A competitive firm charges price equal to MC,which makes competitive firm more efficient than a monopoly.
B.Marginal product is change in total product per unit change in output.
Marginal Revenue product is the market value of one additional unit of a product/resource.
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