A well-defined supply function is most likely available to:
- a monopolist.
- a firm operating in perfect competition.
- a firm operating in monopolistic competition.
Solution
Solution
B is correct because "In perfect competition, the firm’s supply schedule is represented by the marginal cost schedule."
A is incorrect because "[a]s in the market structures of monopolistic competition and oligopoly, the monopolist does not have a well-defined supply function that determines the optimal output level and the price to charge."
C is incorrect because "[i]n perfect competition, the firm’s supply schedule is represented by the marginal cost schedule. In monopolistic competition, there is no well-defined supply function."
The Firm and Market Structures Learning Outcome
- Describe a firms supply function under each market structure