Identify the following statement's accuracy and briefly state why. All participant in perfect competition is price taker, while in monopoly, only the monopoly power is the price maker while every other participant is a price taker the similarity between perfect competition and monopoly is the absence of government intervention. Perfect competition is economically efficient as it produces an equilibrium point in which the price and quantity of goods is equal, thus maximising the total surplus. In monopoly, the market is inefficient as monopoly power maximises their revenue by setting their own price
Identify the following statement's accuracy and briefly state why. All participant in perfect competition is price taker, while in monopoly, only the monopoly power is the price maker while every other participant is a price taker the similarity between perfect competition and monopoly is the absence of government intervention. Perfect competition is economically efficient as it produces an equilibrium point in which the price and quantity of goods is equal, thus maximising the total surplus. In monopoly, the market is inefficient as monopoly power maximises their revenue by setting their own price
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 6SQ
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Question
Identify the following statement's accuracy and briefly state why.
- All participant in
perfect competition is price taker, while inmonopoly , only the monopoly power is the price maker while every other participant is a price taker - the similarity between perfect competition and monopoly is the absence of government intervention.
- Perfect competition is economically efficient as it produces an equilibrium point in which the price and quantity of goods is equal, thus maximising the total surplus.
- In monopoly, the market is inefficient as monopoly power maximises their revenue by setting their own price. This would create a scenario where
consumer surplus will decrease andproducer surplus will increases, as well as the presence ofdeadweight loss , which were the potential gain that is not realised by consumer or producer.
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