Assume that a pure monopolist and a purely competitive firm have the same unit costs. Contrast the two with respect to (a) price, (b) output, (c) profifits, (d) allocation of resources, and ( e) impact on the distribution of income. Since both monopolists and competitive fifirms follow the MC = MR rule in maximizing profifi ts, how do you account for the different results? Why might the costs of a purely competitive firm and those of a monopolist be different? What are the implications of such a cost difference?
Assume that a pure monopolist and a purely competitive firm have the same unit costs. Contrast the two with respect to (a) price, (b) output, (c) profifits, (d) allocation of resources, and ( e) impact on the distribution of income. Since both monopolists and competitive fifirms follow the MC = MR rule in maximizing profifi ts, how do you account for the different results? Why might the costs of a purely competitive firm and those of a monopolist be different? What are the implications of such a cost difference?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that a pure monopolist and a purely competitive firm have the same unit costs. Contrast the two with respect to (a)
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