Which of the Following Accurately Describes a Major Difference Between

question 160

Multiple Choice

Which of the following accurately describes a major difference between a monopolist and firms in competitive price-searcher markets?

• A) A monopolist will maximize profit, while firms in competitive price-searcher markets will maximize sales.
• B) A monopolist may be able to earn long-run economic profit, but firms in competitive price-searcher markets will not be able to do so.
• C) A monopolist will charge a price that is greater than its marginal cost, but competitive price searchers will charge prices that are just equal to their marginal cost.
• D) A monopolist will charge a price that is just equal to its marginal cost, but competitive price searchers will charge prices that are greater than their marginal cost.

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Definitions:

Long-run Equilibrium

A state in which all firms in a competitive market are making just enough profit to stay in business, with no incentive to enter or leave the market.

MR = MC

A condition where a firm's marginal revenue (MR) equals its marginal cost (MC), commonly used to determine the profit-maximizing level of output.

ATC

Stands for Average Total Cost, which is the cost per unit of output, calculated by dividing the total cost by the quantity produced.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, synonymous with the cost per unit including all variable and fixed costs.