Which one of the following is NOT correct ?
[amp_mcq option1=”The Average Revenue and Marginal Revenue curves of a perfectly competitive firm are perfectly elastic” option2=”The Marginal Revenue curve of the monopoly firm is above its Average Revenue curve” option3=”In the long-run, a competitive firm earns only normal profits” option4=”In equilibrium, the Marginal Cost Curve of the monopoly firm may be rising, falling or constant” correct=”option2″]
This question was previously asked in
UPSC CAPF – 2019
– Monopolists are price makers; their demand curve is downward sloping.
– For a downward-sloping demand curve, MR is always less than AR (for Q > 0) and lies below the AR curve.
– In the long run, perfect competition allows for free entry/exit, leading to normal profits.
– A monopolist maximizes profit where MR=MC, and the MC curve can have various slopes in the relevant range.