Question

These graphs represent the price and output quantities of purses under perfect competition and monopoly. How much more or less will Jackie pay for a purse in a perfect competition than in a monopoly?

A) $20 more
B) $10 less
C) $20 less
D) $40 less

Answer 1

C) $20 less

Step-by-step explanation:

I have uploaded the graph below.

We can see in the graph that in perfect competition, Jackie will pay $30 dollars for five purses, while in monopoly, she will pay $50 dollars for the same quantity of purses, meaning that she will pay $20 less.

This situation shows one key difference between the two market structures: in perfect competition, prices are lower because they are equal to marginal cost, while in monopoly, prices are higher because they are more than the marginal cost.