Question

Identify the false statement. Group of answer choices a.A monopolist and a perfectly competitive firm both produce where price equals marginal cost. b.A monopolist and a perfectly competitive firm both produce an output level where marginal revenue equals marginal cost. c.A monopolist and a perfectly competitive firm both maximize profits. d.A monopolist and a perfectly competitive firm both charge a price based on the demand curve facing the firm and the costs borne by the firm.

Answer 1

Answer:

The correct answer is option a.

Explanation:

A perfectly competitive market has large number of firms in the market, the firms are price takers. The firms face a horizontal line demand curve. The demand curve represents the marginal revenue as well as average revenue.

A firm is able to maximize profit by producing at the point where price or marginal revenue is equal to marginal cost.

A monopoly market has only single producer with no close substitutes. The firm is able to maximize profit by producing at the point where the marginal revenue is equal to marginal cost.

It does not produce at the point where price is equal to marginal cost.