GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is no difference at all
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Under perfect competition, the MC = MR whereas under monopolistic conditions this need not be the case
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The MC should rise at the point of equilibrium under perfect competition whereas under monopoly it can rise, fall or remain constant
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None of the above
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Detailed explanation-1: -A second important difference between the two is that while under perfect competition, equilibrium is possible only when marginal cost is rising at the point of equilibrium, but monopoly equilibrium can be reached whether marginal cost is rising, remaining constant or falling at the equilibrium output.
Detailed explanation-2: -As there is freedom of entry in perfect competition and monopolistic competition, the firms can only earn normal profits in the long run. However, as there is a restriction on the entry and exit under a monopoly market, the firms can earn abnormal profits.
Detailed explanation-3: -The conditions for Equilibrium in Monopoly are the same as those under perfect competition. The marginal cost (MC) is equal to the marginal revenue (MR) and the MC curve cuts the MR curve from below.