A simple monopoly will maximize its profit by producing the quantity where
A) price and marginal cost are equal.
B) the demand curve crosses the average cost curve.
C) marginal cost reaches its minimum.
D) marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

In order to maximize profit, a monopoly should produce at the quantity where marginal revenue equals marginal cost. At this point, the additional revenue gained from producing one more unit is just equal to the additional cost of producing that unit, maximizing the difference between total revenue and total cost, which is the definition of profit.

A Simple Monopoly Will Maximize Its Profit by Producing the Quantity