The monopolist will maximize profit if she produces where
A) price equals marginal cost.
B) price equals the minimum average total cost.
C) marginal revenue equals marginal cost.
D) marginal revenue equals average total cost.
E) elasticity of demand is zero.

Question

Quizplus · Accepted Answer

Maximizing profit requires that the marginal revenue earned from the last unit sold should be equal to the marginal cost of producing that unit. Hence, the monopolist will maximize profit where marginal revenue equals marginal cost.

The Monopolist Will Maximize Profit If She Produces Where