A monopoly can charge any price it wishes, and chooses the
A) highest price
B) price equal to marginal cost
C) price associated with the output level where MR = MC
D) competitive price to keep out potential entrants
E) price associated with greatest efficiency

Question

Quizplus · Accepted Answer

A monopoly sets the price based on the output level where marginal revenue (MR) equals marginal cost (MC) to maximize profits. This is because at this point, any additional unit produced would cost more than the revenue it generates, and any less would mean losing out on potential profits.

A Monopoly Can Charge Any Price It Wishes, and Chooses