Answered: How is Demand and Marginal Revenue in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.How is Demand and Marginal Revenue in perfect competition different from monopoly

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In both, the monopoly and perfect competition firms work towards achieving their objective of profit-maximization. The firms in both the market structure maximize their profits by producing at an output level where the marginal revenue of the firm becomes equal to the marginal cost of the firm.

In the perfectly competitive market structure firms can earn positive or negative economic profit in the short run but in the long run, every firm in this market structure earns only zero economic profit. On the other hand, in the monopoly market structure firm can positive economic profit both in the short-run and in the long run.

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