Which statement is true? (LO2) a) The monopolist and the perfect competitor both produce where \(\mathrm{MC}\) equals MR. b) Neither the monopolist nor the perfect competitor produce where MC equals MR. c) The monopolist, but not the perfect competitor, produces where \(\mathrm{MC}\) equals MR. d) The perfect competitor, but not the monopolist, produces where \(\mathrm{MC}\) equals MR.

: Marginal Cost refers to the additional cost incurred with every extra unit produced by a firm. On the other hand, Marginal Revenue refers to the additional revenue generated from selling one more unit of a product. In a perfectly competitive market, every firm is a price taker and cannot control the product's price. The demand curve in this market is horizontal, and the Marginal Revenue is equal to the product's price. In a monopoly market, a single firm controls the entire market, and the demand curve is downward-sloping. Monopolists can control the product's price, so their Marginal Revenue is different from the price.

: To maximize its profit, a firm should produce until the cost of producing an additional unit (MC) is equal to the additional revenue generated from selling that unit (MR). Let's analyze the given statements: a) The monopolist and the perfect competitor both produce where MC equals MR: True or False? A perfectly competitive firm would indeed produce where MC equals MR, as it is the condition to maximize their profit. Similarly, a monopolist also produces where MC equals MR to achieve its profit maximization point. Hence, statement (a) is true. b) Neither the monopolist nor the perfect competitor produce where MC equals MR: True or False? Since we've established that both the monopolist and perfect competitor produce where MC equals MR, statement (b) is false. c) The monopolist, but not the perfect competitor, produces where MC equals MR: True or False? As we have already established that both the monopolist and the perfect competitor produce where MC equals MR, statement (c) is false. d) The perfect competitor, but not the monopolist, produces where MC equals MR: True or False? As mentioned earlier, both the monopolist and the perfect competitor produce where MC equals MR. Thus, statement (d) is false.

: Based on the analysis in steps 1 and 2, statement (a) is true, while the other ones are false. Therefore, the answer is: "The monopolist and the perfect competitor both produce where MC equals MR."