Author Question: What are the main differences between a monopolist and a perfectly competitive ... (Read 44 times)

soccerdreamer_17 · **on:** Jun 30, 2018

What are the main differences between a monopolist and a perfectly competitive firm?

Question 2

Why is there a supply point and not a supply curve for a monopolist?
a. A monopolist cannot affect the market price by changing its supply.
b. A monopolist produces a homogeneous product having similar substitutes.
c. A monopolist equates the price which it charges with its marginal cost.
d. There is only one quantity and price at which a monopolist operates.
e. A monopolist supplies to a large number of consumers.

alvinum · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A monopolist is a price maker, while a competitive firm is a price taker. A competitive firm can therefore change its output level without any impact on market price, while a change in production by a monopolist implies a change in the price of the product. This is because, being the sole producer, the market demand curve is the demand curve the monopolist perceives. A competitive firm on the other hand perceives a demand curve horizontal at the market price.

Answer to Question 2

d