Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 12

Assume that a pure monopolist and a purely competitive firm have the same unit costs. Contrast the two with respect to (a) price, (b) output, (c) profits, (d) allocation of resources, and (e) impact upon the distribution of income. Since both monopolists and competitive firms follow theMC = MR rule in maximizing profits, how do you account for the different results Why might the costs of a purely competitive firm and a monopolist be different What are the implications of such a cost difference