Chapter 11R, Problem 20MCQ

To determine

The correct option for given situation where monopolist firm’s market strategy as compared to competitive firm is explained.

Answer to Problem 20MCQ

Option c is correct answer.

Explanation of Solution

Explanation for correct option:

c.

In monopolist firm, the firm can charge higher prices for their products in the market as there is only one seller selling that product whereas in competitive market, firm sells similar products as their competitors due to which they charge lower prices and produces higher quantity as compared to monopolist firm. Therefore, option c is correct.

Explanation for incorrect options:

a.

Monopolist firm produces unique or differentiated product due to which they can charge higher prices and can produce lower quantity. Therefore, option a is incorrect.

b.

As compared to the competitive market, monopolist firm’s products are sold at higher prices and they produce lesser quantity. Therefore, option b is incorrect.

d.

Monopolist firms are single selling firm that can charge higher prices for their products. Monopolist firm if charging higher prices produces less quantity. Therefore, option d is incorrect.

e.

A competitive firm usually produces large quantity as their prices are comparatively lower than the products sold by monopolist firms. In monopoly competition firms, the level of output is different from that of competitive firms. Therefore, option e is incorrect.

Economics Concept Introduction

Marginal revenue: MR refers to the revenue that is generated by the firm by selling one additional unit in the market.

Demand curve: Demand curve refers to the relationship between price and the output at which consumers are ready to purchase.