Let P = price,MR = marginal revenue,and MC = marginal cost.For a profit-maximizing monopolist,which relationship holds

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist produces and sells goods up to the level where marginal revenue is equal to marginal cost (MR=MC). However, to maximize profits, the price charged must be higher than the marginal cost (P>MC), meaning that the price charged will be set at a point where demand is relatively inelastic, allowing the monopolist to charge a higher price than the cost of production. Therefore, the correct relationship is P>MR=MC.

Let P = Price,MR = Marginal Revenue,and MC = Marginal