Economics Concepts: Perfect Competition and Monopoly

In a perfectly competitive market, what is the relationship between price and marginal revenue for an individual firm?

• Price equals marginal revenue

• Price is less than marginal revenue

• Price is unrelated to marginal revenue

• Price is greater than marginal revenue

What characterizes the demand curve for a monopoly?

• It is horizontal

• It is downward sloping

• It is upward sloping

• It is vertical

Why is marginal revenue less than the demand curve in a monopoly?

• Because the firm has no control over pricing

• Because the firm charges the same price to all customers

• Because the firm charges different prices to different customers

• Because the firm can price discriminate

In a monopoly, when does total revenue reach its maximum?

• When marginal revenue equals demand

• When marginal revenue is zero

• When marginal revenue is positive

• When marginal revenue is negative

What is the ultimate goal of a firm, whether in perfect competition or monopoly?

• To maximize profit

• To maximize market share

• To minimize costs

• To maximize total revenue