A perfectly competitive firm is said to be more efficient than a monopoly firm because

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BlackTom AI · Accepted Answer

Allocative efficiency requires price equal marginal cost (P = MC), and productive efficiency occurs where output is at minimum average total cost (min ATC). In long-run perfect competition both conditions hold; a monopolist typically violates them. Step-by-step reasoning: 1. Perfect competition: each firm is a price taker facing a perfectly elastic demand at the market price. In long-run equilibrium firms produce where P = MC and P = min ATC. That means output is at the socially efficient level and price is as low as possible consistent with covering costs. 2. Monopoly: a single seller faces the market (downward-sloping) demand curve. Marginal revenue (MR) lies below demand, so the monopolist picks output where MR = MC and then charges the price on the demand curve. Because MR < P at each quantity, the monopoly chooses a lower quantity and a higher price than the competitive outcome, giving P > MC and creating deadweight loss (lost transactions that would have been mutually beneficial). 3. Numerical illustration: let demand P = 100 − Q and constant MC = 20. For a monopolist MR = 100 − 2Q. Set MR = MC: 100 − 2Q = 20 → 2Q = 80 → Qm = 40. Price from demand: Pm = 100 − 40 = 60. Under perfect competition price equals MC: Pc = 20, so Qc solves 20 = 100 − Q → Qc = 80. Thus Pc (20) < Pm (60) and Qc (80) > Qm (40): competition yields lower price and higher output. Why the correct choice is C: it states that perfectly competitive firms charge lower prices and produce more output than monopoly firms, which matches the theoretical and numerical results above. Why other choices are wrong: a) Hours worked are unrelated to market structure efficiency. b) Perfect competition produces homogeneous (not more differentiated) products. d) Perfectly competitive firms face a more elastic (indeed perfectly elastic) demand, not a less elastic one. Therefore, the correct answer is C, as given.

A perfectly competitive firm is said to be more efficient than a monopoly firm because单项选择题

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