Which one of the following is NOT correct ?
The Average Revenue and Marginal Revenue curves of a perfectly competitive firm are perfectly elastic
The Marginal Revenue curve of the monopoly firm is above its Average Revenue curve
In the long-run, a competitive firm earns only normal profits
In equilibrium, the Marginal Cost Curve of the monopoly firm may be rising, falling or constant
Answer is Wrong!
Answer is Right!
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.