Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383



Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The perfectly competitive firm exhibits resource allocative efficiency (P = MC), but the single-price monopolist does not. What is the reason for this difference?

To determine

The difference between perfectly competitive market and monopoly.


Both the productive and allocative efficiencies can only be seen in the perfectly competitive market, where the industry’s demand curve is horizontal. In a horizontal demand curve, price is equal to marginal cost is equal to marginal revenue is equal to average cost is equal to average revenue (P=MC=MR=AC=AR) . Therefore, the resource allocative efficiency P=MC exists in a perfectly competitive market, whereas in a single price monopoly that faces a downward sloping demand curve, the price will be greater than the marginal revenue. The monopoly firm produces at the point where MC=MR  while there is no resource allocative efficiency because monopoly sets a price that is greater than the marginal cost.


Perfectly competitive market: A perfectly competitive market is a market structure where there are many buyers and sellers, and there are identical products in the market.

Monopoly: Monopoly refers to a market structure with the features of a single seller and more buyers. The firms have full control over the market.

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why do marketers use sales promotion?

Foundations of Business (MindTap Course List)

What is a computer virus?

Accounting Information Systems

Distinguish between product and period costs.

Intermediate Accounting: Reporting And Analysis

How does the deductibility of interest and dividends by the paying corporation affect the choice of financing (...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Find all the answers to your study problems with bartleby.
Textbook solutions plus Q&A. Get As ASAP arrow_forward