What do all firms in all four market structures have in common?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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All firms in all market structures have a number of things in common.  All of them must try to sell their products to customers.  All of them have to sell at prices that are in some degree set by the laws of supply and demand.  All of them are trying to make a profit. 

However, none of these is likely to be the answer you are supposed to give.  The most likely answer for this is that all firms in all of the different market structures have the same profit-maximizing or loss-minimizing point.  This point is determined by the firms’ marginal revenues and marginal costs.  All firms in all market structures should produce the quantity of goods or services at which their marginal revenues are equal to their marginal costs.  This is just as true for firms in monopoly as it is for those in perfect competition.

 

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