GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Given that cost conditions are same, in monopolistic competition price is ____ and output is ____ as compared to perfect competition.
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Same, lower
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Lower, higher
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Higher, lower
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Higher, same
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Explanation:
Detailed explanation-1: -In monopolistic competition, profits are maximized at a point where marginal revenue is equal to marginal cost. The price determined at this point is known as equilibrium price and the output produced at this point is called equilibrium output.
Detailed explanation-2: -Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient. Monopolies produce an equilibrium at which the price of a good is higher, and the quantity lower, than is economically efficient.
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