Only true price taker is the perfect competition model. Only true price seeker is the monopolist. All others are somewhere in between. It does seem that there is a problem with the above question. A Oligopoly. B Monopolistic competition. C Pure competition. D Pure monopoly. Correct Answer: B Monopolistic competition is another name for competitive price-searcher markets.
They have no market power to charge a different price because its many free-entry competitors are selling identical products. They face a typically horizontal demand curve. This powerlessness means that selling one more unit would bring in marginal revenue exactly equal to the market price. Economic surplus is the difference between the reservation price highest price one is willing to pay and the marginal cost of a good. Total economic surplus is the sum of total consumer surplus and total economic profit.
List All Search. Instructor Log in. But the same price must be applied to all units sold at any price level. In other words, a lower price needed to sell just one more unit must be offered for all the previous units sold at a higher price. Such sellers are known as single-pricing price searchers. But if there is only one seller for a unique product, the single seller can charge a different maximum price each buyer is willing to pay without fearing any customer defection.
This pricing strategy would work if the buyer paying a lower price cannot resell the product for a profit to the buyer willing to pay a higher price. Such sellers are known as perfect price discriminators. At the other extreme, the product may be so homogenous that buyers cannot tell the difference between sellers.
Such products are known as commodities.
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