A monopoly firm will maximize profits by producing the level of output where:
A)total cost is equal to total revenue.
B)total revenue is at its maximum.
C)the difference between marginal revenue and average revenue is maximized.
D)the difference between total cost and total revenue is maximized.

Question

Quizplus · Accepted Answer

The profit-maximizing level of output for a monopoly is where the difference between total revenue and total cost is maximized. This is because profit is defined as total revenue minus total costs, and maximizing this difference maximizes profits.

A Monopoly Firm Will Maximize Profits by Producing the Level