Which of the following conditions is true at the profit-maximizing output for both a perfectly competitive firm and a monopoly?
A)Price equals marginal cost.
B)Price is greater than marginal cost.
C)Marginal revenue equals marginal cost.
D)Marginal revenue is less than marginal cost.
E)Marginal revenue is greater than average revenue.

Question

Quizplus · Accepted Answer

Both a perfectly competitive firm and a monopoly will produce at the output level where marginal revenue equals marginal cost in order to maximize profits. However, in a perfectly competitive market, the price will also equal marginal cost at this output level, while in a monopoly the price will be greater than marginal cost.

Which of the Following Conditions Is True at the Profit-Maximizing