A single-price monopolist

Question

Quizplus · Accepted Answer

A single-price monopolist maximizes economic profit by producing the quantity at which marginal revenue equals marginal cost. This is because they have market power and can set their price above marginal cost, so producing at a lower quantity where marginal revenue exceeds marginal cost would increase their profit. However, producing at a higher quantity where marginal cost exceeds marginal revenue would decrease their profit. Therefore, the profit-maximizing quantity is where MR=MC.

A Single-Price Monopolist