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    Competitive Market vs. Monopolisitc Pricing

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    A FIRM IN A COMPETITIVE MARKET MODEL TENDS TO MAKE ZERO ECONOMIC PROFITS WHEN CHARGING A PROFIT MAXIMIZING PRICE AND A MONOPOLIST HAS NO LIMIT TO THE AMOUNT OF PROFITS THAT CAN BE EARNED WHEN THEY CHARGE THE PROFIT MAXIMIZING PRICE.
    WHY IS THAT?

    © BrainMass Inc. brainmass.com October 9, 2019, 7:40 pm ad1c9bdddf
    https://brainmass.com/economics/microeconomics/competitive-market-vs-monopolisitc-pricing-125777

    Solution Preview

    In a competitive market, all firms are price takers. They have no power to determine the price of their product. There are also no barriers to entry and exit. So firms will leave the market if ...

    Solution Summary

    The solution tries to explain the following: A FIRM IN A COMPETITIVE MARKET MODEL TENDS TO MAKE ZERO ECONOMIC PROFITS WHEN CHARGING A PROFIT MAXIMIZING PRICE AND A MONOPOLIST HAS NO LIMIT TO THE AMOUNT OF PROFITS THAT CAN BE EARNED WHEN THEY CHARGE THE PROFIT MAXIMIZING PRICE.

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