Question

Both the Onus ferry operator in the monopoly market and each of the Yuri ferry operators in the perfectly competitive market will want to produce at the point that the marginal revenue is equal to the marginal cost. Explain in detail the two reasons that the monopoly’s marginal revenue will always be less than its price while the marginal revenue in the perfectly competitive market will always be equal to the market price.

Answer 1

Answer:

The overview of the given statement is described in the explanation segment below.

Explanation:

Monopoly Market:

• The demand curve or market price towards the firm was indeed sloping downhill. MR is also below P and AR.
• Therefore, when earnings are maximized, whereby MR = MC has been used. Price is therefore above MR (Marginal Revenue).

Perfectly Competitive Market:

• The  price shall be calculated whenever market forces are equivalent.
• The firm seems to be the fixed price and therefore the individual company market price becomes horizontal.

Thus,

⇒  $AR=P =MR$

Hence,

⇒  $P = MR$