A perfect competitor will continue to expand output up to the point where?

Question 22

Step 1: In perfect competition, the firm faces a horizontal demand curve, so $MR = AR = P$.

Step 2: The firm increases output as long as the marginal benefit exceeds the marginal cost, i.e., as long as $MR > MC$ or $MC < MR$.

Step 3: The firm continues to expand output up to the point where this condition holds, which matches option D.

$MC < MR$

D

D

Question 23

Step 1: A monopolist is the sole producer in the market with no close substitutes.

Step 2: Therefore, by changing output, the monopolist affects both market price and market quantity.

Step 3: There are no other producers, so the monopolist cannot influence quantities or prices charged by others (eliminates B and C).

Step 4: Option A says "price or quantity" but the monopolist influences both simultaneously via the demand curve.

D

D