An Important Difference Between a Perfectly Competitive Firm and a Monopolist

question 231

Multiple Choice

An important difference between a perfectly competitive firm and a monopolist is that

• A)the perfectly competitive firm tends to be larger
• B)only the monopolist attempts to maximize profit
• C)only the perfectly competitive firm maximizes profit
• D)the perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve
• E)only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue

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Definitions:

Finished Products

Refers to goods that have completed the manufacturing process but have not yet been sold or distributed to the end customer.

Factory Overhead Cost

The indirect costs associated with manufacturing, including expenses such as electricity, maintenance, and salaries of supervisors.

Direct Material

Raw materials directly used in the production of goods, which are easily traceable to the finished product.

Total Production Cost

Represents the aggregate cost of goods produced, including direct materials, direct labor, and manufacturing overhead.