Question

Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that:

Answer 1

For the competitive firm marginal cost is $5. For the monopolist marginal cost is less than $5.

Step-by-step explanation:

The price of the product of the competitive firm is $5. We know that a competitive firm is a price taker and produces at the point where the price is equal to the marginal cost of producing the last unit.

A monopolist, on the other hand, is a price maker. It produces at the level of output where the price is greater than the marginal cost of producing the last unit.