Question

If a perfectly competitive firm with constant returns to scale was reorganized as a​ monopoly, its monopoly price would be​ ________ the perfectly competitive price and its monopoly output would be​ ________ the perfectly competitive output.

Answer 1

The correct answers are: greater​ than; less than.

Step-by-step explanation:

In the perfect competition model, the nature of the scale returns poses serious problems, whatever the case considered. Sise assumes that the returns of scale are increasing, the supply of companies is infinite; if they are constant, the offer is null, infinite or indeterminate (equilibrium case); if they are decreasing, the profit of the companies is strictly positive in the balance '. In the latter case, if they could do so, companies would be interested in dividing themselves, without any limit, into entities as small as possible.