when marginal revenue falls below marginal cost firms typically adopt the cost benefit principle and halt production as no further benefits are gathered from additional production 
a perfectly competitive firm can sell as many units as it wants at the market price whereas the monopolist can do so only if it cuts prices for its current and subsequent units competitive firms vs monopoliesmarginal revenue for competitive firms is typically constant this is because the market dictates the optimal price level and companies do not have much if any discretion over the price as a result perfectly competitive firms maximize profits when marginal costs equal market price and marginal revenue marginal revenue works differently for monopolies for a monopolist the marginal benefit of selling an additional unit is less than the market price a monopolistic firm s average revenue is its total revenue earned divided by the total units sold a competitive firm s marginal revenue always equals its average revenue and price this is because the price remains constant over varying levels of output in a monopoly because the price changes as the quantity sold changes marginal revenue diminishes with each additional unit and will always be equal to or less than average revenue 