Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that:
A. the competitive firm is charging too much, and the monopolist is charging too little.
B. the marginal benefit from selling an additional unit of output is less than $5 for both firms.
C. the marginal benefit from selling an additional unit of output is $5 for the competitive firm and less than $5 for the monopolist.
D. the marginal benefit from selling an additional unit of output is $5 for both firms.
Answer: C
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What will be an ideal response?
Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?
A. an unprecedented increase in truck sales B. an immediate response by GM and Dodge C. a visit from the antitrust authorities of the government D. a revolution from Ford stockholders